contact an attorney
What are the key terms that a prospective tenant of a commercial lease should consider prior to signing a commercial lease? A prospective tenant should consider negotiating the following key terms in their commercial lease: Read more »
Franchisors many times don’t think about franchisees exiting their system as the opportunity that it really is. Without a formal resale program in place, franchisors can be at the mercy of local business broker, real estate brokers or landlords for the continuity of their locations. When a franchisee is looking to exit the system, they should be embraced and helped in their exit strategy. Many franchisees who want to leave the system are no longer putting forth the effort they they put forth in the first year they opened their doors. By helping a new franchisee take over the location, they can reinvigorate the market and increase their royalty stream from the location. If they aren’t careful, the location can flip to a competitor or just close.
Franchisees should be told that leaving the system is part of franchising and they can help with the transition that will enable them to get a fair purchase price. This is especially true for franchisees that are in trouble and behind in debt or rent payments. By coordinating the efforts and negotiating with the banks and the landlord a potentially disastrous situation can be turned into an opportunity. Read more »
Anywhere I go, when people learn that I am a franchise attorney, they ask me what are the "hot" franchises that prospective franchisees are considering. My answer is that there are certain categories of franchises that are "hot" right now, but it does not mean they are for every prospective franchisee. Read more »
Most business owners do not realize that there is a difference between a franchise and a business opportunity. Franchises are regulated by both the federal law (FTC regulation) and by certain state franchise laws. Business opportunities are also regulated under both certain states' laws and the FTC. Currently the FTC is in the process of promulgating new laws governing business opportunities.
Franchises, under the federal franchise law are business arrangements that meet three criteria: 1) there is a trademark owned by the seller under which the investor operates; 2) the seller receives $500 or greater in the first 6 months that the investor is in business (for product, training or anything else); 3) the seller exercises sufficient control over the investor and the investor's business. If these criteria are met, the FTC franchise law states that the seller/franchisor must provide a regulated franchise disclosure document (FDD) to a prospective franchisee/investor at least 14 calendar days prior to accepting any money from the investor and prior to the investor signing any contract with the franchisor/seller. Read more »
What are a franchisee's rights and duties upon the termination of the franchise agreement? Upon termination of the franchise agreement for any reason, the rights and duties of the former franchisee are specified in the franchise agreement he or she signed. Typically these obligations include several key steps that are essential to the franchisor and to other continuing franchisees.
The first step is that a former franchisee should immediately cease using the logos and trademarks of the franchise system. This means that if you were a franchisee of ABC Doggie Daycare franchise, for example, you would need to remove everything showing that name and any logo, including on any signs, Yellow Pages listings, any advertisements, all stationery and brochures, etc. You would also have to change the decor that makes your location look like an ABC location and change any clothing that identifies your employees as part of the ABC system. If ABC was a food service franchise then any recipes and food products that were proprietary to the franchisor would also have to be removed. Read more »