Franchise Q & A

1. I hear that buying a franchise is a good way to start in business. What exactly is a franchise?

Franchising is a marketing technique whereby the developer of a product or service (the franchisor) seeks to expand the market for his product or his service through the use of the labor and financing of others by granting to these others (franchisees) an exclusive right (franchise) to market his product or service in a specified area for a specified length of time, under the franchisor's trademark or trade name and marketing plan.

2. A friend of mine told me that all I really need to use someone’s trademark is a license. What is the difference between a license and a franchise?

An exclusive license to sell the product or service differs from a franchise in that the franchise contemplates a continuing close, cooperative relationship between the franchisor and the franchisee, and a system of operation designed to identify the product or service with the franchisor and the franchisee. An independent retailer has no established ‘system’.

3. How much control do I have over my franchise? I really don’t want someone else making my business decisions for me.

The amount of control the franchisor has over the franchisee depends entirely upon the agreement between them.

4. You mean I have to sign an agreement?

Yes you do. The franchise relationship is contractual, meaning it is legally enforceable.

5. Do I need an attorney to review the franchise agreement?

Since this is one of the biggest investments you will probably make in your life, it is worthwhile to have sound legal advice before you even begin discussing the franchise agreement. In fact, it should start with a legal review of the Uniform Franchise Offering Circular (UFOC).

Education and counseling are the keys to choosing a good franchise and making a good franchise deal. Hagen & Melusky Law Offices and Windsor Center, Inc. have teamed up to bring you both education and counseling developed exclusively for franchisees. Access online training or call for legal advice.