FRANCHISE LEGAL HUB POWERED BY WALDROP AND COLVIN

Franchising or want to Franchise?

Explore the Franchise Legal Hub to learn more about franchising from a franchisors perspective. Franchising is a great business model, but it is highly regulated and success often requires a partnership between business leads and business minded franchise attorneys.  Our goal of this Website is to provide a 10,000 foot overview and serve as a resource for certain areas that frequently arise in franchising. Of course, the Website is no substitute for legal advice.  We encourage entrepreneurs to seek guidance from an experienced franchise attorney regardless of whether they are an emerging or seasoned franchisor. Many legal issues require a fact specific inquiry. 

What Qualifies as a "Franchise"?

Under the federal Franchise Rule, Franchising occurs anytime the following three elements are present:

Right to Operate

The buyer will obtain the right to operate a business that is identified or associated with the seller’s trademark, or to offer, sell, or distribute goods, services, or commodities that are identified or associated with the franchisor’s trademark

Degree of control

The seller will exert or has authority to exert a significant degree of control over the buyer’s method of operation, or provide significant assistance in the buyer’s method of operation

Exchange of money

As a condition of obtaining or commencing operation of the business, the buyer makes a required payment or commits to make a required payment to the seller or its affiliate. 

If these three elements are present, its likely a franchise!  There are few narrow exemptions under 16 CFR Part 436, Subpart E, Section 436.8. However, calling a franchise relationship an affiliate or licensee does not make it so.  Likewise, refusing to put an agreement in writing does not negate that a franchise relationship is formed. Its important to work with trained legal counsel to understand what satisfies these elements and ensure you either franchise the correct way or do not accidentally franchise. The consequences of illegal franchising can be severe. Franchises can only be offered by disclosure of a Franchise Disclosure Document (the “FDD”). 

one stop shop for franchise legal support

Evaluate The Business

Is your business and team ready to franchise? The first step is to determine if franchising is right for your business.

Prepare and Issue the FDD

The franchise disclosure document (the "FDD") is the legal document required before a franchisor can offer franchises

Protect Intellectual
Property

Protect your brand name through federal trademark registration before licensing the name to others

Obtain
State Approval

Franchisors must understand where they can offer and sell franchises and obtain state approvals when required

Disclose the FDD to prospects

Franchises are sold by disclosing the FDD in compliance with federally and state mandated waiting periods

Update the FDD As required

Franchisors must comply with federal and state laws, rules and regulations when launching and operating a franchise system

Negotiate Vendor and Supplier Agreements

Success in franchising requires a good working relationship.

Manage the Franchise Relationship

Success in franchising requires a good working relationship.

Maintain System Compliance

Success in franchising requires a good working relationship.
UNDER CONSTRUCTION