The attorneys at Raj Abhyanker PC provide a full range of legal services to help new and established franchisors including:
- Creating and drafting a Franchise Agreement and Franchise Disclosure Document tailored to your needs as a new franchisor
– Reviewing existing franchise documents to ensure compliance with franchise laws
– Negotiating with franchisees to close franchise sales
– Trademark filing, licensing, and other intellectual property needs in connection with your franchise
– Property acquisition, punch lists, and real estate lease and sublease agreements
– Incorporating your business: Assisting you in determining the best corporate structure to reduce risk and optimize profits
Why Should I Franchise my Business?
There are many benefits to franchising your existing business or even creating a new franchise including the ability to expand your business’ reach while licensing your franchise’s trademarks to franchisees who will pay you for the right to use your system. You will be able to establish certain protocols and standards for franchisees to use to avoid diluting your brand. Franchising a great way to keep your costs low while growing your business which allows you to focus on branding and marketing while leaving daily operations in the hands of the franchisee. Contact Raj Abhyanker PC and our attorneys can assist you in making this decision and what to expect throughout the process.
What Documents Will I Need to Start Franchising My Business?
The most important document that will need to be drafted is the Franchise Disclosure Document (FDD). Before you can offer your franchise for sale you must provide the FDD to a potential franchisee. The FDD must disclose all material information to the franchisee so an informed decision can be made on whether to purchase the franchise or not.
What Is Included in the Franchise Disclosure Document?
The FDD must include information about the franchisor’s business experience, whether the franchise is involved in any litigation, or anyone in control of the franchise has filed for bankruptcy. In addition to that, it must provide the franchisee estimates on costs for running the franchise including the initial investment, monthly/yearly costs payable to the franchisor, and other costs to third parties. The FDD will outline the territory granted to the franchisee and outline the obligations of the parties to each other.
Are There Other Legal Requirements for Starting a Franchise?
Thirteen states require the franchisor to file the FDD with the Federal Trade Commission before it can be offered to potential franchisees including: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. Several other states have requirements that the franchisor file documents with them or provide some kind of notice before offering franchises for sale there.
If you fail to register the FDD or file the correct paperwork, you may be subjected to various penalties. Furthermore, you could be liable to your franchisees losses they sustain in operation of the franchise if the proper filing requirements are not met.
Raj Abhyanker PC works with franchisee clients through all stages of development including:
- Negotiating the purchase of a franchise from a franchisor or existing franchisee
– Reviewing and negotiating all franchise documents in your best interest
– Creating your corporate entity, from initial structuring, shareholder agreements, partnership agreements, and operating agreements
– All real estate matters, including negotiating punch lists, zoning issues, leases and subleases, and environmental issues