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National Franchisor Law Firm
Every successful business has an experienced team of professionals behind it. If you are thinking of franchising your business, the attorneys at Spadea, Lanard & Lignana can get you started on the right foot.
With more than 25 years of experience in franchise law, including years of service as in-house counsel to international weight loss franchisor Nutri/System, Inc., attorney Nancy Lanard and her associates bring extensive knowledge of franchise law to franchise clients nationwide. If you are ready to take the next step in the growth of your business, contact our franchise law attorneys today.
To learn more about franchising your business, read Nancy's article On the Road to a Franchise.
Making the Decision to Franchise Your Business
The decision to franchise a business can be a complex one. If you decide to franchise your business, you will no longer be in the business of selling widgets, you will be in the business of selling franchises. This is a huge philosophical change for most entrepreneurs.
Beyond that significant change, how do you determine if your business is one that can spin off successful franchises? Consider the following questions:
- Can the franchised business generate sufficient money to make it worthwhile to a potential franchisee? Can the potential franchisee afford to pay normal business operating expenses and a royalty fee to you?
- Can the business concept succeed in other areas of the country?
- Is the business concept easily learned by others who are inexperienced in the industry?
- Do you have a logo or trade name that is registered with the US Patent & Trademark Office or easily recognizable?
Deciding on the Terms of Your Franchise
Once you have decided to start a franchise business, you have a number of decisions to make, such as:
- The amount to charge for the initial franchise fee and royalty payments
- Who will be the authorized suppliers
- What advertising fees should you charge to franchisees
- What obligations should the franchisee have to the franchisor
- What type of support will you provide to your franchisee
- How will franchisees be trained
- How should you define the franchisee’s territory
- How much should you charge for royalty payments
- Should you charge a minimum royalty
Preparation of a Franchise Disclosure Document (FDD)
Your business must comply with federal franchise laws governed by the Federal Trade Commission (FTC), and often with state regulations as well. Franchisors are required to provide a written disclosure document (called a Franchise Disclosure Document (FDD)) to all potential franchisees within a certain period of time. The FDD must disclose 23 required items to potential franchisees, including:
- A summary of the business and anticipated competitors
- Any required regulatory compliance for that industry
- Information about the background of the franchisor
- Bankruptcy and litigation history of the company and people involved
- Trademark registration information
- The total initial expected investment by the potential franchisee in the first 3 to 6 months of operating the franchised business
- A schedule of company and franchised locations and anticipated franchise openings
- Audited financials of the franchisor
Skilled Legal Help Ensures You Comply With Federal Reporting Requirements
In addition to the FDD, a franchisor must have a franchise agreement, which will govern the relationship between the franchisee and franchisor, an Operations Manual, training procedures and sufficient financial and personnel resources to support the franchise system.
These requirements may seem overwhelming, but there is no need to be concerned. Our firm has the experience and knowledge to help you with this complex process. We can recommend consultants who can assist you in setting up your franchise system, determining appropriate fees, preparing Operations Manuals and developing training procedures.
We will prepare the documents needed for compliance with the FTC and those states in which you intend to sell franchises. We can provide legal guidance on franchise business issues as well as assist you with contracts, employment law, and other legal services.
Once you are franchising, our firm will provide on-going assistance with annual FTC and state compliance and franchisee issues.
In everything we do, we put you in a strong legal position to start selling franchises.
Do not risk your business and your financial future by relying on a template or a lawyer who is unfamiliar with franchise law. We are here to support and guide you every step of the way. Contact a franchise lawyer at Spadea, Lanard & Lignana.