Tampa Franchise Litigation Attorneys
Establishing & Protecting Business Chains
At Four Rivers Law Firm, our attorneys are well-versed in all aspects of franchise law. Whether you are the party seeking to be part of a franchise or the owner of a business seeking to begin a franchise, we can help you handle the legal side of these transactions.
Call our business law firm at (813) 331-5056 for a consultation today.
What Is a Franchise?
Franchises are businesses that are legally permitted to use a larger company’s copyrights, name, business practices, and logo. The franchiser offers the use of these items in exchange for a fee and a percentage of the other party’s profit. The party seeking to be part of a franchise (franchisee) uses the items to establish and conduct a business.
Although the franchisee is part of a larger corporation, they still operate their business on an independent level. This means that the franchisee is responsible for all aspects of ensuring the success of their business.
Franchises have 3 characteristics that set them apart from privately owned businesses. These characteristics are:
- The franchisee uses the trademarks, name, logo, and products of a franchise company.
- The franchisee pays the franchiser a percentage of their gross income each year.
- The franchiser maintains control over the way the franchisee conducts their business.
Franchise Laws are federal and state stipulations to govern the offer, sale, registration, and legal partnership of franchisors and franchisees. All franchises in the United States are governed by the Federal Franchise Rule (FFR). This rule gives important information to all parties involved in a franchise arrangement to help them weigh the benefits and risks of this investment. Additionally, this rule requires franchisors to provide all possible franchisees with a disclosure document.
According to the FFR, a franchisor must provide a franchisee with information regarding:
- the franchise owner, any parent companies, and/or affiliates
- existing bankruptcies
- startup cost estimations
- business restrictions
- obligations the franchisee would have to the franchise
- franchise-provided assistance
- franchise-provided advertising
- territorial limitations and rights
- existing celebrity endorsements
- dispute resolution procedures
- financial performance representations
The FFR sets a minimum standard for the disclosure obligations of a franchisor but leaves an option for each state to supplement this law with specific requirements and laws. In Florida, there are no additional registration and state-specific franchise laws. However, there is a Sale of Business Opportunities Act (SBOA) that requires franchisors to file a Franchise Exemption Notice annually.
Franchising is an agreement in which one party grants another the right to use its business model, name, and logo to run a business. The franchisee usually pays a fee upfront and/or a percentage of the potential business revenue.
The franchisee enters into this agreement to gain:
- name recognition
- products and/or services specific to the franchise
- methods of successful advertising and product delivery
Additionally, this agreement serves to establish all aspects of the partnership. This means that if either party makes a business decision that goes against what is in the agreement, then they could have legal repercussions.
Examples of agreement violations include:
- the franchisee fails to pay royalty fees
- the franchisee violates a non-compete clause
- the franchisee misuses franchise information
- the franchisor encroaches on or competes with the franchisee’s business
- the franchisor fails to properly train and/or support the franchisee
Offering Sound Legal Advice & Guidance to Business Entrepreneurs
Franchise law can be a complex legal area to navigate. Luckily, our attorneys can help you effectively and efficiently establish a franchise and maintain your legal obligations while doing so. We are up to date on all the latest laws and will always direct you to do what is in your best interest.
To schedule an appointment with one of our attorneys, call us today at (813) 331-5056 or contact us online.
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