Tag Archives: franchisees

How Do I Protect My Interests as a Franchisor?

A franchise can be an extremely rewarding enterprise for both the franchisor and the franchisee. However, both parties have separate interests to protect so it’s important that all agreements are clear before any permanent commitments are made. Although the franchise is a joint venture in some ways, both the franchisor and the franchisee have some separate goals and concerns that can conflict. It’s a good idea for everyone involved to work with a business law attorney to make sure the agreements are mutually beneficial.

There are a large number of business law regulations that protect franchisors. When you want to enter into an agreement with a potential franchisee, you will need to create a document called a Uniform Franchise Offering Circular (UFOC). This is an extensive document that outlines the obligations that both you and the franchisee agree to.

It’s important that every part of the UFOC is written carefully to protect your interests. You have many concerns to address such as trademarks, copyrights and the territory limitations that apply to the franchise. A qualified business attorney can help you complete a UFOC or review the document before you make a commitment.

franchisorWhen you are creating the UFOC, you will need to consult with your account to help you prepare the financial statements necessary. This is a helpful practice because it gives you an extensive picture of the health of your company. You are required by business law to disclose complete financial information to potential franchisees. This practice is required because it gives the franchisee information about your company.

Your UFOC should contain specific details about the financial arrangements between you and the franchisee. A well-constructed UFOC will prevent misunderstanding between you and your business partners. Strong, up-front agreements prevent expensive lawsuits. Your business law attorney can advise you about common problems that franchisors experience. Then, you can work with the attorney to construct contracts that are designed to avoid these common issues.

Business law protects franchisees in some ways, but they don’t protect them in every situation. There are issues to consider such as bankruptcy, operating agreements and initial investments. An experienced business attorney can help you avoid these situations by constructing the franchise agreement properly.

How Do I Start a Franchise?

start a franchiseStarting a franchise can be a rewarding, but daunting undertaking. There are many business law regulations to consider. You must also carefully review your financials and create contracts with franchisees that benefit both parties. A franchise is a great strategy for quickly growing your business especially if the business model is easy to duplicate.

A franchise is designed to help a business expand with the involvement of other partners. Franchise agreements are subject to a variety of business law regulations that protect both the franchise owner and the franchisee. It’s a good idea to work with an experienced attorney to design your franchise operation in a manner that protects your interests.

You will need to find franchisees that can help your business grow. They should be willing to make a financial investment in the company. If they are not, they probably won’t be committed to the business. You’ll need to personally invest a lot of money to start a franchise. You will need to hire a business law attorney, an accountant and invest money in training franchisees. There are also costs involved in creating and distributing marketing and advertising materials. You may need to develop technology systems for the business. In addition, you will still need to invest the money needed to sustain your current business.

You will have to construct a document required by business law called a Uniform Franchise Offering Circular (UFOC) before you enter into a formal relationship with a franchisee. This document will contain much of the information that both parties need before signing a formal agreement. A UFOC contains details on your finances. It also details the obligations that you incur as the franchisor. Many business law attorneys help their clients create these documents because they contain so many important details.

No one wants to think about bankruptcy, lawsuits or other serious problems in franchise relationships. Your business law attorney can help you prepare agreements that address worst case scenarios so you have a plan just in case. You can create carefully constructed contracts that will protect your interests in case serious problems develop with the business itself or with a franchisee.

Uniform Franchise Offering Circulars and Franchisees

What is a Uniform Franchise Offering Circular (UFOC) and how does it apply to franchisees? This is a common business law question for franchisors and potential franchisees. When someone agrees to open a franchise, they incur a variety of financial and legal obligations. The UFOC outlines all this information which is why it is such an important business law document. Because these agreements are new to most potential franchisees, they will benefit from working with an experienced attorney.

franchisingThe UFOC contains critical information for the franchisee and no one should consider proceeding without this information. Business law requires franchisors to provide all the information contained in an UFOC to potential franchisees. This is one way business law protects franchisees.

The UFOC is a complex document. It is a good idea to work with an attorney to review the information it contains. Many UFOCs contain a great deal of legal information and can be confusing for someone without business law experience. An attorney can evaluate the UFOC and explain unfamiliar terms. The attorney can also explain how the information in the document will affect the franchisee.

A UFOC is made of three parts and contains 23 sections. These sections describe various aspects of the franchising organization’s program. It should contain audited financial statements, a copy of all forms and contracts the franchisee must sign and details of the obligations the franchisee is undertaking. A UFOC contains details that affect many business law issues such as dispute regulation, contract termination, restrictions, trademarks and fees.

An attorney can help the franchisee understand the complete picture of the potential franchise relationship. What initial investment is necessary? Do all aspects of the UFOC meet relevant business law regulations? What obligations does the franchisee have in terms of actually operating the franchise? What happens if the franchisor or the franchisee declares bankruptcy?

The UFOC gives the potential franchisee a picture of the financial health of the franchisor. The financial statements may be complex, but a qualified attorney can explain the information these documents contain. The UFOC will also contain a list of other outlets, territory restrictions and many other critical pieces of information.