A franchise agreement is a license that establishes the rights and obligations of the franchisor and the franchisee. A franchise agreement protects the franchisor's rights and interests in and to its intellectual property and brand presence throughout its franchise operations. A franchise agreement is often flexible, especially for the franchisor, so that the franchisor can control most aspects of the franchisor-franchisee relationship necessary to maintain and evolve the brand and consumer offers throughout the life of the agreement. A franchisee is buying into a ready-made, proven-concept business; however, franchisees are obligated to manage their independently-owned businesses within the franchisor's brand standards. For an overview of how to open a franchise, view our Steps To Opening A Franchise Summary .
Our Dallas franchise attorneys can advise you on a wide range of legal matters involving franchise agreements, including personal guarantees and leases. The basic elements of a franchise agreement include the following:
At Wilson Legal Group, our Dallas franchise lawyers utilize a team-based approach with access to multiple attorneys with substantive years of experience in many practice areas. Our trial attorneys have significant experience handling disputes between franchisors and franchisees, and our franchise attorneys help clients achieve their objectives through franchising, licensing, and distribution arrangements domestically and internationally. Our attorneys represent franchisors and franchisees in international trademark protection and international trademark and domain name portfolio management. Whatever your franchise services needs may be, our Dallas franchise attorneys have the talent, resources, and experience to meet them in an efficient, timely, and cost-effective manner.
The franchisor exercises control or provides directed assistance to the franchisee regarding how the franchisee uses the franchisor's brand to conduct business. However, the franchisee remains an independent contractor and not a joint employer, and those brand controls do not extend to the human resources of the franchisee, nor do they extend to how the franchisee manages its business—aside from meeting the requirements of the brand standards—on a daily basis. The franchise is a separate business from the franchisor even though it must follow certain contractual obligations imposed by the franchisor. Other items of importance concerning the franchisor-franchisee relationship include the following:
A franchise disclosure document (FDD) is a document which is required by the Federal Trade Commission to be given to a potential franchisee which provides that franchisee with specified categories of information about the franchisor and the franchise offering, including information about the franchisor’s business, the terms of the relationship, and the rights and obligations of the license sufficient for prospective franchisees to make an informed decision before entering into a franchise relationship. A franchise disclosure document (FDD) must be written in plain English and without legal jargon, and include items such as the following:
Franchisor Disclosure Document Requirements | |
---|---|
The Franchisor and any Parents, Predecessors, and Affiliates | Franchisor Training |
Franchisor Business Experience | Territory Restrictions |
Franchisor Litigation | Franchisor Trademarks |
Franchisor Bankruptcies | Franchisor Patents |
Initial & Other Fees | Franchisor Copyrights |
Estimated Initial Investment | Other Franchisor Proprietary Information |
Restrictions on Sources of Products and Services | Obligation to Participate in the Actual Operation of the Franchise Business |
Franchisee’s Obligations | Restrictions on What the Franchisee May Sell |
Financing | Renewal, Termination, Transfer |
Franchisor’s Assistance | Dispute Resolution |
Advertising | Financial Performance Representations |
Computer Systems | Financial Statements and Contracts |
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