Understanding Franchising

| Oct 28, 2020 | Franchise Law |

Some people in Miami might associate a franchise with restaurants or convenience stores, but more than 100 industries offer franchises. In its simplest form, a franchise involves one company licensing how it does business, its intellectual property and its name to another business owner.

The franchisor-franchisee relationship

The franchisor is the business selling franchises, and the purchasers are the franchisees. Franchisees operate independently, and this means they are able to hire people, pay them and manage them as they see fit. However, elements that have to do with the brand itself, such as uniforms, come from the franchisor. The franchisor may suggest best practices for certain elements. Marketing, training and quality control are generally the purview of the franchisor. In an ideal relationship, the franchisor and franchisee work together for their mutual benefit.

Franchise regulations

There are both federal and state franchise laws, and parties who have decided to franchise their business or to purchase a franchise must remain in accordance with both. Franchising may be the right choice for a business expansion, but it is not always. Business owners who are considering franchising may want to talk to an attorney about the situation to determine whether it is the right choice for them and to ensure that they are complying with all regulations if they decide to franchise.

An attorney who has handled cases dealing with franchise law may be helpful whether you are a franchisor or a franchisee. An attorney might be able to assist in setting up the franchise initially as well as in dealing with any franchise-related issues that could require mediation or even litigation. If the franchise is one that already exists, an attorney might be able to review paperwork if necessary and assist in renewing any agreements.

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