Minnesota Franchise Law|
minnesota franchise lawyers, minnesota franchise
WHAT IS A FRANCHISE?
When most people think of a franchise, they think
of the McDonalds, Burger Kings and Taco Bells of the world. It may include automotive franchises like Jiffy Lube or Car-X.
Certainly, those are all well established franchises. However, every
franchise once started from more modest beginnings. You will see franchises
spring up from all sectors of business from fitness equipment to
Franchising is all about creating a successful model for others to follow. That business model has value which may
include name recognition and proprietary information from recipes to business procedures to
When that information is provided to others, it
may be done through a franchise. Simply put, a franchise is
a legal and commercial relationship between the owner of a trademark,
service mark, trade name, or advertising symbol and an individual or
group wishing to use that identification in a business.
Every person who purchases a franchise is called
a franchisee. What they are buying into is an authorization by a parent
company, or franchisor, to sell their goods and/or services either in a
retail space or a designated geographical area. Just how broad or narrow the restraints related to the franchisee are can have a dramatic impact on revenue and long term viability of a franchise. That is precisely why having an experienced franchise attorney is an important part of the process.
This relationship is regulated by the Federal
Trade Commission and its rules and laws.
These rules and laws can be very complicated. They
form a labyrinth of requirements that must be met in
order for a franchise to be created.
Once a franchise has been purchased, the franchise agreement governs
the process of conducting business between the two parties. It's scope may be broad or narrow depending on the negotiations between the parties. Often, franchise agreements control
the quality of the products sold, the vendors from whom products may be purchased, the way they are sold, the businesses operating hours and staffing, and even
the requirements related to the physical location and physical appearance of the franchise business.
The franchise model is one that has been very
successful for nearly every area of business. It includes
construction companies, trucking companies, automotive dealerships, rental agencies, employment agencies, insurance agencies, equipment providers, restaurants,
and motels and hotels. It's applications are nearly limitless.
Even more compelling, the franchise model has a proven track record of success and
provides a way for business owners to share
common costs related to marketing so that their
business gains name brand recognition regardless
of location. Would we be aware of Starbucks coffee outside of Seattle without it being franchised?
A new start up
business would not have that expertise and would
have to experience the growing pains related to
most start up operations. A franchise
operation gives the new franchise owner a
critical head start that otherwise would not be
available to businesses starting from scratch.
A franchise purchase or sale may be a good
idea or bad depending on the industry, the
support provided by the franchisor and the
restrictive nature of the franchise agreements.
No one should ever walk through that type of
mine field without a consultation with an
experienced franchise lawyer. All
too often, uncounseled franchise agreements are
poorly negotiated, poorly constructed and, in the
end both the franchisor and franchisee may find themselves in conflict or with
an investment that does not
produce financial dividends.
You should ALWAYS consult with an experienced
franchise lawyer in your state regardless
whether the franchise is well established or a
smaller operation. The financial
considerations alone may make or break any