Business Law - Franchise & Distribution
Did You Know?
- There are an estimated 1,500 franchise companies operating in the U.S. doing business through more than 320,000 retail units
- 75 industries use franchising to distribute goods and services to consumers
- Average initial investment level for nearly 8 out of 10 franchises, excluding real estate, is less than $250,000
- Average royalty fees range from 3% to 6% of monthly gross sales
- Most franchise companies have fewer than 100 units
- Average length of franchise contract is 10 years
Franchise & Distribution law is a complex field that relates to the approximate 40% of the retail economy that is franchised, and the additional segment of non-franchised distribution of goods and services. A Franchise Attorney can help entrepreneurs, prospective and current franchisees and prospective Franchisors, who need assistance to start a franchise business or expand their current franchise business or those .who seek help in franchising their new business concept.
Franchise attorneys can help prospective franchisees by evaluating the franchise agreement or franchise contract that the Franchisor wants the franchisee to sign, and negotiate changes in terms that are onerous to his client. Under what circumstances can the Franchisor terminate the franchise? What state's franchise law will govern if a Franchisor/franchisee dispute arises? Is the Franchisor free to sell franchise products nearby, for example, in supermarkets, and to compete with the franchisee's sales? Etc. The franchise agreement must be scrutinized to protect the franchisee.
Contract law governs the Franchise or Dealer Agreement and is the foundation of Franchise & Distribution Law. In addition, Franchise & Distribution law includes:
- Antitrust Laws
- Business Opportunity Laws
- Consumer Protection Laws including "Little FTC Acts"
- Federal Trade Commission Rules
- Fraud Claims
- Industry Specific Statutes
- Price Discrimination Laws
- Racketeer Influenced & Corrupt Organizations Act (RICO) -- Registration, Disclosure, Relationship & Termination Acts
- Trademark Laws
- Trade Secret Laws
Top 10 Franchise Industries
- Fast Food
- Retail
- Service
- Automotive
- Restaurants
- Maintenance
- Building & Construction
- Retail - Food
- Business Services
- Lodging
A lawyer can help you determine whether you wish to become a Franchisee, start your own business or buy an existing business. When entering into the franchise relationship, an attorney can help you negotiate a franchise contract that would best suit your business goals and priorities. A lawyer may also help you find legal relief if a party to the franchise agreement does not perform as promised, or is imposing unreasonable requirements.
The Franchise Agreement
The franchise agreement is the contract establishing the relationship, including rights and obligations, of the Franchisor and franchisee. Generally, the franchise agreement provides the following:
- The franchise fee
- Restrictions placed on the business management structure of the franchisee
- The cost of inventory
- The income the franchiser requires and when it will be calculated
- Length of the agreement
A termination clause - upon what event will the Franchisor terminate the franchise agreement. For example, some Franchisors require that if your franchise does not make a specified income, the franchise will be terminated.
CONTACT A FRANCHISE ATTORNEY IN YOUR AREA
If you are in need of legal advice or services, or simply wish to speak to an attorney who has successfully handled Franchise Litigation in your state, you may use our Free Online Consultation Form.
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