What is the Technology Fee and Why Should I Charge My Franchisees One?
Businesses are increasingly defined by the technologies they use internally or that they offer to their customers; franchisors are no exception Technology is interwoven into the way that businesses think about themselves and the world. For example, Amazon famously declared itself first a technology company that “just happens to do retail.” Developments in technology distinguish companies from their competition and open new growth opportunities.
Your franchise business likely depends of an array of systems to interact with customers, provide goods and services, and link franchisees to you and each other. Or, perhaps, those advancements are still aspirations for your system, and you want to leave the door open to introduce those technologies later.
Having the technology fee disclosed in your Franchise Disclosure Document (“FDD”) and included in your Franchise Agreement provides you with the flexibility to implement technologies systemwide and have your franchisees help bear the cost.Continue Reading What is the Technology Fee and Why Should I Charge My Franchisees One?
Franchise Disclosure Document (“FDD”) Items 5, 6, and 7 Explained
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.
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Trademark Registration 101
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
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.
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How Non-Competition Agreements Protect Franchisors
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’
Should I Include an Item 19 in my FDD?
But…how much money am I going to make?
This is the primary question a prospective franchisee will ask before signing on the dotted line.
As a franchisor, it is in your best interest to respond, especially if your business has been profitable. In the franchise world, the mechanism by which to respond is called the Item 19.Continue Reading Should I Include an Item 19 in my FDD?
The Basics of Federal Franchise Law
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.
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Leasing Issues in Franchising
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.
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What Is an FDD and Why Do I Need One?
What is an FDD and Why Do I Need One?
What It Is
“FDD” is the commonly used acronym for “Franchise Disclosure Document.” The purpose of an FDD is to provide important information to people who are interested in purchasing franchises.Continue Reading What Is an FDD and Why Do I Need One?