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Practice Definitions  | Franchise Law

Franchise Law

Franchise Law image
Franchise Law is the area of law revolving around the right or license that is granted to an individual or group to market a company's goods or services in a particular territory under the company's trademark, trade name, or service mark.

Franchising in the United States is governed by federal law administered by the Federal Trade Commission (FTC) and by a variety of state statutes. Franchise laws differ greatly from state to state. The following are a few examples of some of the differences:
  • Some states have rather strict franchise regulations others do not. For example California, Hawaii, Illinois, New York, Rhode Island have enacted "franchise registration" statutes governing sales practices.
  • Other states, including Florida, Georgia, Iowa, Kentucky and North Carolina regulate franchising through "business opportunity" acts. And a few states, such as Connecticut, Michigan, Minnesota and South Dakota have both.
  • Maryland, Arkansas, California, Illinois, Iowa, Minnesota and some other states have laws regulating termination and non-renewals of agreements.
  • Proposed ads must be pre-approved in California Illinois, Indiana, and Maryland prior to publication.
What is a Franchise?

A franchise is a retail outlet owned by independent, third party operators through which a company distributes its products or services. The independent operator does business using the marketing methods, trademarked goods and services and the "goodwill" and name recognition developed by the company. In exchange, the independent operator pays an initial fee and royalties to the owner of the franchise.

The company that grants the independent operator the right to distribute its trademarks, products, or techniques is known as the franchiser. The independent, third party business person distributing the franchiser's products or services through retail or service outlets is called the franchisee.
Should I hire a lawyer?
Yes, whether or not you are currently faced with or involved with a legal issue, a franchise attorney provides highly valuable services including, but not limited to:
  • Provide legal guidance and advice on whether to franchise or pursue other means of distribution and growth.
  • Provide legal guidance and insight on growing your franchise or distribution systems domestically and internationally, and wherever opportunity may be present.
  • Provide legal counsel on multi-unit ownership and co-branding.
  • Provide a variety of transactional, litigation and dispute resolution services.
  • Representation of area developers and representatives, sub-franchisors, multi-unit and single-unit franchisees, licensees, dealers, distributors, and independent franchisee associations in transactional, litigation and dispute resolution matters.

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