Delain Law Office, PLLC, a law firm concentrating in franchise law with offices in Schenectady, New York, and practicing both nationally and internationally, partners with select clients to effectively use the state and federal laws governing franchises to maximize their income and enhance the quality of their business life.
Often, the best way to realize the potential of our clients’ useful or creative work is to license that work under a franchise agreement to other parties.
What Is a Franchise?
A franchise is a business model involving as its lynchpin a license agreement that allows the franchisee to use the franchise owner’s intellectual property, including trademark, trade dress, patent, and copyright. Examples of successful franchises include familiar fast food chains such as McDonald’s® or Burger King® or higher-end restaurants such as Olive Garden. Other types of businesses can also be franchised, such as Home Depot® or Staples®.
The franchise owner markets his intellectual property to persons who wish to use the existing property in business. The franchise owner generally provides help with location, marketing and advertising, any proprietary methodologies, training, supplies, and all the “trappings” of the franchise. The party being licensed for the franchise generally provides a down payment and a percentage of the income from the business in franchise fees.
The Federal Trade Commission oversees franchises in the United States. The FTC’s Franchise Rule gives prospective purchasers of franchises the material information they need in order to weigh the risks and benefits of such an investment. The Rule requires franchisors to provide all potential franchisees with a disclosure document containing 23 specific items of information about the offered franchise, its officers, and other franchisees. Required disclosure topics include, for example: the franchise’s litigation history, past and current franchisees and their contact information, any exclusive territory that comes with the franchise, assistance the franchisor provides franchisees, and the cost of purchasing and starting up a franchise. If a franchisor makes representations about the financial performance of the franchise, this topic also must be covered, as well as the material basis backing up those representations.
The franchisor must zealously oversee and police the use of his intellectual property. In this way, all franchise outlets have the same look and feel, which is required for the franchise to operate successfully as a franchise. McDonald’s provides a good example of a well-policed franchise; the look-and-feel of the stores in New York is the same as the look-and-feel of the stores in California or Kansas or France or Japan.
It is important to be careful when setting up and running a franchise to avoid running afoul of antitrust laws and regulations.
How Can We Work Together To Form My Franchise?
At Delain Law Office, we combine our knowledge of and experience in negotiating, reviewing, and preparing franchise agreements together with the information provided to us by our client during exploratory meetings to create a comprehensive intellectual property franchising strategy. We believe that the most appropriate solutions result from direct communication with our clients, preferably in face-to-face meetings, although we are happy to work via telephone, fax and email if distance, time or circumstance requires that.