What do you need to know to create a franchise of your business from a legal perspective? You have a successful business concept.  You may have even had inquiries regarding buying a franchise of the business concept.  To franchise your business you will need a federally registered trademark, compliance with the FTCs requirement of a disclosure document (FDD) and legal compliance with certain state requirements. This post will discuss the legal aspects of franchising your business.

First, you must have a federally registered (or at least applied for) trademark with the US Patent and Trademark Office. Registration of your name and logo will protect the name and logo from others attempting to copy your name and/or logo. However, you should know that anyone using the name or logo prior to your use, has priority rights to that name and/or logo for their marketing area. The trademark and other intellectual property (trade dress, etc.) is the cornerstone of what someone will be licensing from you when they buy a franchise from you. Read more »

There are many concerns of a weight loss franchise that need to be addressed by the prospective franchisee. Many individuals contact me looking to invest in a weight loss franchise believing that the product works, so the franchise should be successful. Unfortunately, just because a weight loss product works for you does not mean it will be a good franchise investment for you. Read more »

Most commercial retail leases are triple net leases. What this means is that the landlord passes through all expenses to the tenants on a pro-rata basis. These expenses typically include taxes and common area maintenance charges (known as CAM charges). CAM charges in a commercial lease are typically added on to base rent as additional rent. A landlord typically will try to pass through as much of the overhead as possible through CAM charges. It is common to find administrative and maintenance fees, costs for repair and replacement of roofs, lighting, plumbing, electrical wiring, HVAC, etc., for the common areas. How can a prospective tenant minimize the CAM charges? A prospective tenant can attempt to negotiate a cap on CAM increases yearly, a fixed fee of CAM charges (typically the cap and fixed fee will exclude snow removal in northern climates), exclusions to items that the landlord may pass through to the tenant (for example, exclude costs due to the landlord's or another tenant's negligence), among others. Read more »

The federal Patient Protection and Affordable Care Act, signed into law March 23, 2010, includes a provision that creates a national, uniform nutrition-disclosure standard for restaurants. This articles discusses the impact on franchises in the restaurant industry.

Along with the federal Patient Protection and Affordable Care Act came a new federal law requiring that any restaurant chain with greater than 20 units must display calories for each of their standard menu items. This new law becomes mandatory in 2012.  The law will preempt local, county and state ordinances that are in place in California, New York City and Philadelphia, among others. The question becomes, how will this effect franchisors and franchisees in the restaurant industry? 

Franchisors will need to ensure that all of their franchisees are in compliance with the new law.  The federal law simplifies standards across the country, thereby making it easier for franchisors to ensure compliance with the laws.  Prior to the federal law, a franchisor may have to be concerned with understanding the laws of various municipalities, such as New York City and Philadelphia, which may vary greatly in their requirements.  Since the new federal law preempts any local and state regulations, compliance is easier to govern. Read more »

Due diligence in evaluating a franchise is an essential step to take prior to moving forward in buying a franchise. Some of the due diligence I recommend is that a prospective franchisee should speak to many franchisees that are in the franchise system and former franchisees that have left the franchise system to find out what they liked and disliked about the support and training they received from the franchisor.