Have a Successful Concept You Want to Franchise? We Can Help.
Franchising is a great way for a business owner who comes up with a novel concept to spread it to the world. Franchising is a big business in the United States. But before you start franchising, you need the right documents, the right disclosures, the right filings and registration and most important, the right lawyer.
We have helped franchisors from those in their infancy, to those who have grown and attracted private equity investments to mature franchise systems. But our expertise is helping emerging franchisors create franchise systems and documentation built for growth and success.
The Franchise Documents You Need to Franchise Your Business
How do you go about selling a franchise? Well, it starts with drafting some heavy documentation. The three most significant franchise documents are the franchise disclosure document, the franchise agreement, and the operations manual. The franchise disclosure document discloses comprehensive information about the franchise required under various states laws and the Federal Trade Commission’s (FTC) Franchise Rule. The franchise agreement is a legal document that controls the franchise relationship, and the operations manual tells franchisees how to operate the franchise.
What’s in the Franchise Disclosure Document:
The franchise disclosure document or FDD for short is broken down into 23 items. Brief overviews of each item in the FDD are provided here. Each item contains important information to be disclosed about the franchise system. We work with emerging franchisor clients to understand their business. Through four questionnaires and client meetings, we gather the information needed to prepare your FDD and franchise agreement. Preparing the FDD itself can be a long process and if done wrong, opens up the franchisor to liability where franchisees fail. But if done right and the proper disclosures are in place, a franchisor can confidently go to market selling franchises.
What about the Franchise Agreement?
While the FDD discloses information about the franchise system and its history, the franchise agreement is the legal document that describes the franchisor and franchisee’s respective contractual obligations. In preparing the franchise agreement, we establish the foundation for your franchise system including the length of the term, fees, territory, suppliers, transfer, renewal, termination and more. Using our experience working with franchisors at various levels of growth we can envision issues that you may not have thought about. This allows us to work with you to create a franchise agreement that will last and will not need substantial revisions every year.
Complying with Franchise and Busines Opportunity Registrations and Filings
The Federal Trade Commission (“FTC”), the nation’s consumer protection agency, requires that franchisors provide prospective franchise owners with a franchise disclosure document. The FTC identifies what a franchisor must disclose to a franchisee in this document. Still, the FTC does not review the documents, approve their contents, or typically bring any enforcement actions against franchisors who do not include required items in the franchise disclosure document. But many states do.
Thirteen of fifty states are franchise registration states: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, Virginia, Washington, and Wisconsin. State regulators or examiners in these states review franchise disclosure documents to ensure the inclusion of all required items. However, the level of review can very substantially. Other states have filing or one-time registration requirements. In this labyrinth of state laws, it pays to have a franchise law firm that knows its way around. Wherever you would like to sell franchises we can help get you registered.
An Experienced Franchise Attorney With Flat Fee Services
Franchise attorney Doug Luther served as in-house counsel to a franchisor and has deep experience in every aspect of franchising. In that role, he built the legal department and advised the franchisor on a multitude of legal issues. His background and business acumen provide additional value and insight that others cannot match. Since starting his firm, he has advised a wide assortment of franchisors from those just starting, to international franchisors coming to the United States to franchisors seeking to grow and looking for expertise in franchise law.
Our services are provided at a competitive flat fee. This allows you to know exactly what the costs are so that there are no surprises. For the flat fee we will include the following:
Consultation and the providing of legal questionnaires to obtain all information necessary for preparing the franchise disclosure document and franchise agreement;
Creation of a business entity to franchise (we will create a corporation or limited liability company for you, including the creation of articles of incorporation, bylaws, statement of information and requesting an EIN) (this also includes filing costs);
Preparation of the franchise disclosure document;
Preparation of the franchise agreement and related exhibits;
First year registration or filings in up to 5 requested states (this includes responding to any comment letters provided by regulators and making revisions to any of the documents); and
Advice and counsel as to franchise law sales compliance.
Schedule Your Consultation Today
If you’re ready to move forward with setting up a franchise or just have additional questions about the process, we welcome your call. Whether you are in Orange County, Los Angeles, San Diego, Southern California, or beyond, contact a franchise attorney to schedule a consultation to discuss how we can help.