Hiring The Curry Law Group to represent you in franchise matters can help you better understand franchise law and draft essential franchise agreements. An experienced franchise attorney can save you from being involved in any franchise schemes, swindles or scams and in the case of a franchise breach of contract, we can provide valuable legal council in determining which category the alleged breach of contract falls into.
A Franchise Disclosure Document And A Franchise Agreement
Fraud and misrepresentation claims in the franchise context commonly involve a franchisor that has misrepresented its franchisee with incorrect or deceiving descriptions and details of the franchise system. A potential franchisee should carefully regard the marketing and advertising demands of a franchisor before entering into a franchise agreement. Whether you are a franchisee or franchisor please call our firm for a conference with any questions you may have regarding a franchise agreement. The franchise agreement is the effective contract between franchisee and franchisor.
Business Owners Buying Into A Franchise
A potential franchisee investor should regard a number of factors when choosing a franchise. Operating and buying a franchise may involve a large investment and substantial risk. Franchisors are often quick to express the many benefits of operating a franchisee but these advantages must be carefully considered and weighed against the potential financial risk.
Generally, in terms of distribution, the franchisor is a supplier who allows an operator, or a franchisee, to use the supplier’s trademark and distribute the supplier’s goods. In return, the operator pays the supplier a fee.
The following U.S. listing tabulates the early 2010 ranking of major franchises along with the number of sub-franchisees (or partners) from data available for 2004. As can be seen from the names of the franchises, the United States is a leader in franchising, a position it has held since the 1930s when it used the approach for fast-food restaurants, food inns and, slightly later, motels at the time of the Great Depression. As of 2005, there were 909,253 established franchised businesses, generating $880.9 billion of output and accounting for 8.1 percent of all private, non-farm jobs. This amounts to 11 million jobs, and 4.4 percent of all private sector output.
A franchise can be exclusive, non-exclusive or ‘sole and exclusive’.
Three important payments are made to a franchisor: (a) a royalty for the trademark, (b) reimbursement for the training and advisory services given to the franchisee, and (c) a percentage of the individual business unit’s sales.
These three fees may be combined in a single ‘management’ fee.
A fee for “disclosure” is separate and is always a “front-end fee”.
A franchise usually lasts for a fixed time period (broken down into shorter periods, which each require renewal), and serves a specific territory or geographical area surrounding its location.
One franchisee may manage several locations.
Agreements typically last from five to thirty years, with premature cancellations or terminations of most contracts bearing serious consequences for franchisees.
A franchise is merely a temporary business investment involving renting or leasing an opportunity, not the purchase of a business for the purpose of ownership. It is classified as a wasting asset due to the finite term of the license.
Franchise fees are on average 6.7% with an additional average marketing fee of 2%.
1. Subway (sandwiches and salads) | startup costs $84,300 – $258,300 (22,000 partners worldwide in 2004).
2. McDonald’s | startup costs in 2010, $995,900 – $1,842,700 (37,300 partners in 2010)
3. 7-Eleven Inc. (convenience stores) | startup costs in 2010 $40,500- $775,300, (28,200 partners in 2004)
4. Hampton Inns & Suites (midprice hotels) | startup costs in 2010 $3,716,000 – $15,148,800
5. Great Clips (hair salons) | startup costs in 2010 $109,000 – $203,000
6. H&R Block (tax preparation and now e-filing) | startup costs $26,427 – $84,094 (11,200 partners in 2004)
7. Dunkin’ Donuts | startup costs in 2010 $537,750 – $1,765,300
8. Jani-King (commercial cleaning) | startup costs $11,400 – $35,050, (11,000 partners worldwide in 2004)
9. Servpro (insurance and disaster restoration and cleaning) | startup costs in 2010 $102,250 – $161,150
10. MiniMarkets (convenience store and gas station) | startup costs in 2010 $1,835,823 – $7,615,065
Mid-sized franchises like restaurants, gasoline stations and trucking stations involve substantial investment and require all the attention of a business person. There are also large franchises like hotels, spas and hospitals.
Some of the data above was provided courtesy of Wikipedia.org. Information on this website is for general information purposes only and not legal advice. For proper legal council and to protect your rights, you should contact one of our qualified, experienced attorneys today.
State And Federal Franchise Registration And Disclosure Laws
Many states have consumer protection laws and/or unfair commerce practice laws that increase protections to franchisees. Be sure your franchise agreement is compliant with Florida franchise laws prior to entering into an agreement or offering one to potential franchisees.
Litigation Counsel In Many Franchise Disputes &
Alternative Dispute Resolution Authorized By The Federal Courts
Individuals or a business can employ Franchise arbitration and mediation as conflict resolution to reduce lawyer fees and legal services costs. The manner of the arbitration process can allow for faster resolution. Parties to a franchise dispute are frequently unable to afford the cost of litigation and in such cases, mediation is often a reasonable solution. When franchise disputes can not be resolved in discussion, and the filing of a law suit is cost prohibitory or undesirable to the offended, the parties may pursue a formal mediated hearing. Franchise Mediation can resolve disputes with fast, fair justice within a legal framework that can save both time and money. In a the case of serious disputes, people tend to sue for justice but arbitration aims to resolve the dispute in a legal and affordable manner. If you are interested in filling a law suit with respect to a franchise agreement or if you are seeking mediation, please feel free to contact us today.
The franchise attorneys of The Curry Law Group offer numerous services to existing franchisors to help them get the most from their franchise systems. Whether you are buying an existing franchise or own a business and are considering offering franchise rights to others, or just looking into what is involved, make sure you obtain the advice of an experienced franchise attorney. Proper legal counsel will provide prospective franchisees with the ability to make smart franchise decisions.
The Curry Law Group has an experienced team of Franchise Attorneys protecting the rights of Tampa Bay Area small business owners and individuals.
If you live in the Tampa area and need to speak with an attorney who can assist you with the review of a franchise agreement, establishing your business as a franchise, offering franchise opportunities, disputes over franchise agreements, filing a law suit over a franchise dispute or if you need mediation council and representation regarding a franchise dispute, then don’t delay. Call Curry Law Group Today!