In Florida and throughout the United States, disclosure laws are in place to help protect would-be franchisees from buying a franchise while uninformed. Franchise attorneys can also play a role in making the franchisor / franchisee business relationship an open book.
Turning a Business into a Franchise
A business owner may wish to turn his or her successful business into a franchise, thereby licensing the exact same business model, under the identical business name, to another individual in exchange for, usually, a percentage of revenue and other fees.
Franchise law attorneys are usually called upon by business owners for the legal advice needed to get franchise concepts off the ground, and to draft all the documents required by law to own, operate and license a franchise.
2 Key Franchise Contracts
The process of turning a business into a franchise involves, among many other things, the creation of two key documents:
- The Franchise Agreement, which grants the franchisee the right to operate the franchise business for a specified period of time, under a specified name, and according to a specified format.
- The Franchise Disclosure Statement, which outlines the franchise opportunity, including all restrictions and costs involved.
Franchise Law is Highly Regulated
By law, Franchise Agreements must be in the hands of a prospective franchisor for 14 days before the signing of the document may take place.
Also, 23 separate items must be fully disclosed in a Franchise Disclosure Document (FDD).
Such legal requirements, unique to franchise law, are designed, in part, so that the franchisee and franchisor are both fully informed before entering into a franchise arrangement.
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Franchise disputes can occur anytime one party in the franchisee / franchisor relationship feels the other has violated the Franchise Agreement or the Franchise Disclosure Document.
An example violation could be referred to as "geographic encroachment". Before buying a franchise, a franchisee is told how exclusive his or her franchise location will be geographically, that is, how many other locations, owned by other franchisees or even themselves, are permitted within a certain number of miles.
If a franchisor were to allow a new location any closer than the geographic proximity agreed to in the Franchise Agreement, a dispute could arise as impacted franchisees seek legal help to rectify the matter.
Before Meeting with a Franchise Lawyer
Before meeting with a franchise lawyer, it's best to gather the following documents and bring them with you, if available, to your initial consultation:
- Franchise Disclosure Document
- Franchise Agreement
- Real Estate Lease or Purchase Agreements
- Business Plan
- Loan Documents
Also, it may be helpful to bring any pertinent communiqué between franchisee and franchisor thus far.