Franchise Fundamentals

Items 5, 6, and 7 of a Franchise Disclosure Document (“FDD”) are all about money – how much the franchisor charges for the goods and services it provides franchisees before the franchised business opens, how much the franchisee will pay to the franchisor throughout the business relationship, and how much the franchisee will need to invest to open the business. After reading Items 5, 6, 7, the franchisee must understand how much things cost, how much they’ll be paying you, and when they will be making payments.

It is important for you to give accurate estimates to avoid litigation risks and help prospective franchisees evaluate their ability to successfully finance and open the business.
Continue Reading Franchise Disclosure Document (“FDD”) Items 5, 6, and 7 Explained

Your trademark is a critical asset in your franchise system. You work hard to cultivate the brand associated with the trademark and you carefully monitor how your franchisees and competitors use your trademarks. Registering your trademark with the U.S. Patent and Trademark Office gives you additional legal protections for this valuable intellectual property.


Continue Reading Trademark Registration 101

How to Avoid Litigation in Franchising

There is a host of issues that can arise in a relationship between a franchisor and a franchisee. If not properly addressed, some of these issues can mushroom into legal sparring or even full-blown litigation.

Common issues include the enforcing of system standards, franchisees performing below their and/or the franchisor’s expectations, adapting to changes in the marketplace, diverging values and principles, or compliance with federal and state laws that regulate the franchise relationship.

No matter what the particular catalyst, there are several critical steps a franchisor can take to help assuage – or even avoid – legal issues.
Continue Reading How to Avoid Litigation in Franchising

You have worked hard to grow your business and brand.  The last thing you want to do is give it all away.  A carefully drafted non-competition agreement can protect your brand and trade secrets.

Well-drafted, enforceable non-compete agreements include the following elements:

Narrow List of Prohibited Activities

Courts are increasingly focusing on balancing former franchisees’

The Basics of Federal Franchise Law

 If you’re immersed in the franchise world, you’ve likely heard of the Federal Trade Commission, or FTC, a federal agency that sets forth standards for franchises. However, in the day-to-day grind of running your business, you may not be familiar with just how the law impacts you, as a business owner, on a high level.

Although wading through legal jargon may not be enjoyable, the laws impose very real, tangible risks for business owners. As such, it’s vital to understand both the laws that impact your business and the penalties you may face if you (intentionally or inadvertently) run afoul.
Continue Reading The Basics of Federal Franchise Law

A properly negotiated lease is critical to protecting your franchised business as well as the franchise network and brand. For franchisors, entering into a commercial lease agreement is an important step as the location out of which a business operates is critical to its success. Indeed, the adage “location, location, location” is much more than a cliché: Your business should be in a prime spot with heavy traffic and other quality (non-competing!) businesses nearby that attract patrons. Aside from location, there are other issues inherent in leasing, most notably, securing a lease that protects your ownership interest in your franchised business.

Franchisors often encounter these scenarios: changes in your business model, competition from nearby competitors, struggling franchisees, and a need to assign the lease to a new party.  Here are a few key considerations in negotiating and executing a lease agreement that will help you address these situations.
Continue Reading Leasing Issues in Franchising

New NASAA FDD State Cover Pages for 2020

When you update your FDD for 2020, the first few pages of your will look very different than they have in the past.  NASAA has updated the state cover page requirements.  NASAA updated the cover pages with the intention of better helping franchisees understand and use the FDD.

Below are summaries of the changes to the 2020 state cover pages.  As you familiarize yourself with the changes, the new state cover pages may help you to more effectively and efficiently answer prospective franchisees’ questions about the content of your FDD.


Continue Reading New NASAA FDD State Cover Pages for 2020