what every lawyer should know about franchise law

What You Should Know as a Franchise Lawyer

• Federal and State Franchise Law. Forming, operating and ending franchise relationships makes up the basis of franchise...
• Areas of Franchise Law. Territorial limitations are one of the most important areas of franchise law – one that tends to...
• Lawyers Can Earn Commission On Their Franchise Financing Referrals. Part of your job...

Full Answer

Why do I need a lawyer to open a franchise franchise?

Franchise lawyers may also be able to help you negotiate the terms of your agreement and offer guidance on which aspects of the agreement are vague, requiring additional clarification from the franchisor.

What is the difference between general business lawyers and franchise lawyers?

While general business lawyers will be able to provide counsel regarding business law, franchise specific lawyers will be able to offer very specialized advice based on their past experience dealing with other franchisors and franchisees.

Where can I find a list of law firms that franchise?

The International Franchise Association (IFA) provides a list of their attorney partners on their website. While these firms are reliably franchise-oriented, some work exclusively for franchisors. Also, all pay for IFA membership.

What happens when a franchisee wants to sell a franchise?

Right of first refusal: If a franchisee decides to sell a franchise unit, the franchisor has the option of buying it back themselves or allowing a new owner to buy it and take over operations. In some cases, the franchisee is tasked with finding a new buyer, which the franchisor then needs to approve before final sale.

What 3 things are typically included in a franchise agreement?

Overview of the relationship: This includes the parties to the contract, the ownership of IP, and the overall obligations of the franchisee to operate its business to brand standards.

What are the legal concerns one must be aware of when considering a franchise?

Contractual Obligations to buying a franchiseFranchisor, franchise system, and the agreements a franchisee is required to sign.Key company staff.Management's experience in franchise management.Financial statements.Bankruptcy filings and litigation involving franchisor.Type of training franchise offers.More items...•

What are the basic requirements of the Franchise Rule?

The Rule requires franchisors to provide all potential franchisees with a disclosure document containing 23 specific items of information about the offered franchise, its officers, and other franchisees.

What type of law is franchise law?

Franchise law is the body of law that relates to making, operating and ending franchise relationships. Franchise law encompasses laws and regulations at all levels of government that govern how corporations and individuals may enter into franchise relationships.

What are the two legally documents in franchising?

There are two ​legally required documents you should become very familiar with before ​franchising your business: the Franchise Disclosure Document, and the Franchise Agreement.

Why is the law in franchise important?

The franchising specific law help to ensure that franchisees are provided with proper information to assist them to make a well-informed investment decision, substantive rules guide franchising parties to better conclude and perform the franchise agreements.

What are the three types of franchises?

There are three main types of franchise opportunities available, these are:Business format franchises.Product franchises, or Single operator franchises.Manufacturing franchises.

How often should franchise bylaws be revised?

Under the Federal Trade Commission (FTC) Franchise Rule, the FDD must be updated within 120 days after a franchisor's fiscal yearend.

What are disadvantages of franchising?

Disadvantages to franchisees include high costs and royalty payments, strict product rules, lack of support from uninterested franchisors, lack of flexibility in where to locate and how to trade, and other start-up challenges. Entering into an agreement with an interested franchisor is important.

What states have franchise laws?

Franchise Registration StatesCalifornia. California is a franchise registration state. ... Hawaii. Hawaii is a franchise registration state. ... Illinois. Illinois is a franchise registration state. ... Indiana. Indiana is a franchise registration state. ... Maryland. Maryland is a franchise registration state. ... Michigan. ... Minnesota. ... New York.More items...

How do you evaluate franchise opportunities?

What to consider when evaluating a franchise opportunityThe market. Has a defined market been determined? ... Company history. ... Financial statements. ... Level of investment. ... Training and support. ... Territory. ... Royalties. ... Restrictions.More items...

What is a franchise law definition?

The franchise laws are a combination of federal and state laws that govern the registration, offer and sale of franchises, and the legal relationship between franchisors and franchisees.

Federal and State Franchise Law

Forming, operating and ending franchise relationships makes up the basis of franchise law. It consists of laws and regulations at all levels of government that regulate the way in which individuals and franchises enter into these business relationships.

Areas of Franchise Law

Territorial limitations are one of the most important areas of franchise law – one that tends to come up relatively often. Just like any other business, competition can negatively affect revenue.

Lawyers Can Earn Commission On Their Franchise Financing Referrals

Part of your job as a lawyer is providing your clients with guidance that empowers them to make the right decisions when becoming a franchise owner or expanding their existing franchise. This includes educating them on every aspect of franchise ownership including the money it takes to open, purchase and operate one of these businesses.

Our Clients Have a Track Record of Success

A new franchisee of Orangetheory Fitness in Chicago chose us for their non-SBA financing and now has a sustainable source of income for him and his family. He has reaped the rewards of the following benefits:

Help Clients Properly Finance Their Franchise

Start expanding your income revenues today by joining ICA’s Franchise Referral Program.

What legal services do franchisees need?

Some of the more common services would be: (i) Employment Law – advice on employing and maintaining staff; (ii) Commercial Law – advice on terms and conditions of business, or commercial contracts with suppliers (if these are not subject to the Franchisor’s standard terms); (iii) Data Protection – advice on how you can use personal data received from customers; (iv) Property Law – advice on a lease of any premises or issues arising under it; (v) Corporate Law – advice on shareholders agreements or the operation of the franchisee company. The Franchisee is unlikely to need much further franchising law advice unless or until an issue arises with the franchisor or the franchisee wishes to renew or sell their franchise.

How long is a franchise agreement?

Franchise Agreements are complex legal documents, often 40 – 50 pages long and usually designed to protect the Franchisor’s business interests.

Who is Andy Fraser?

Andy Fraser is the founder of Albany Fraser Solicitors, a commercial law firm with franchising at its heart. He set up Albany Fraser in 2019 with a view to helping franchisors and franchisees of all shapes and sizes make smarter franchising decisions. Andy is accredited by the British Franchise Association as a ‘Qualified Franchise Professional’ and is one of only a small number of lawyers in the UK to have been awarded this status. In addition to being a solicitor, Andy originally trained as a franchise consultant with one of the UK’s leading franchise consultancy practices where he worked on franchising projects for brands such as Ralph Lauren, American Eagle Outfitters, Esprit and Whittard of Chelsea.

Why do franchisors need to have a franchise attorney?

This is because franchisors don’t want to give one franchise owner more preferable terms than another, which could create dissent and resentment within the system. Regardless of whether a franchisor is willing to bend on its terms, having a franchise attorney review them is a MUST.

What can a franchise lawyer do?

Franchise lawyers may also be able to help you negotiate the terms of your agreement and offer guidance on which aspects of the agreement are vague, requiring additional clarification from the franchisor.

How to find a franchise attorney?

How Do I Find the Right Franchise Attorney? 1 IFA. The International Franchise Association (IFA) provides a list of their attorney partners on their website. While these firms are reliably franchise-oriented, some work exclusively for franchisors. Also, all pay for IFA membership. 2 SBA, Bar Association, Chamber of Commerce. Check with your local Small Business Association (SBA) office, Chamber of Commerce, and Bar Association for listings and recommendations of local franchise attorneys. 3 Current Franchisees. Ask some of the franchisees of the system you are considering who they used for legal counsel and what their experience was. 4 Franchise Attorneys. Don’t be afraid to “interview” franchise attorneys over the phone to get an idea of their philosophies, costs, experience, and personalities before making your decision.

What to do before meeting with franchise lawyer?

Prior to meeting with him or her you should review the documents on your own and prepare questions and concerns for your meeting. Don’t worry if some parts of the FDD don’t make sense to you. FDDs usually contain an extensive amount of “legalese” that your franchise lawyer will help to put into layman’s terms.

How do franchisors collect royalty payments?

Royalty payment structure: Some franchisors collect royalty payments through automatic withdrawals from a franchisee’s account , which can make tough financial months even more stressful. This payment schedule is sometimes negotiable.

What is an IFA partner?

The International Franchise Association (IFA) provides a list of their attorney partners on their website. While these firms are reliably franchise-oriented, some work exclusively for franchisors. Also, all pay for IFA membership. SBA, Bar Association, Chamber of Commerce. Check with your local Small Business Association (SBA) office, ...

Is franchise legal advice cheap?

While legal advice is never cheap, consulting with a franchise lawyer will be money well spent, as you are making an investment in your future personal and financial well being.

What is a franchise lawyer?

A franchise lawyer a type of business lawyer that specializes in the legal issues surrounding franchises. If you’re planning to franchise your business or are buying a franchise store, a franchise lawyer can help you through the process.

Do franchise lawyers charge hourly fees?

Many franchise lawyers charge an hourly fee with a retainer. A retainer is lump sum you will pay up front from which the lawyer will deduct hourly expenses. This is based off an estimate of how long your case will take, but if you go over the estimated hours, you will continue to be charged an hourly fee. Make sure to negotiate a rate ...

Is Rocket Lawyer a lawyer?

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.