Franchising 101

How to Choose a Franchise.

Franchising abounds with opportunities. Which one is best for you?  To answer that question is to take a journey inward, because what path you take into the world of franchising depends in great measure on who you are and what you want to accomplish.  Here are five things to think about as you take that journey. .... >> read more

How to make Sense of the Disclosure Document

Becoming a franchisee isn’t like starting a business in your garage. For one thing, you don’t have to invent everything as you go along; when signing up with many franchisors, you buy a complete business system invented by someone else – for example, McDonald’s method of flipping burgers. For another, assuming you sign on with a well-known franchisor, you don’t have to worry about whether people will buy your product or service.  On the other hand, you do have to make sense of the disclosure document, otherwise known as the FDD, or uniform franchise disclosure document – a crucial step in becoming a franchisee, and easier said than done. Here’s what I tell my clients to look for in studying the FDD. .... >> read more

How to Do Due Diligence on a Franchisor

To many of my clients, the easy part about becoming a franchisee is deciding what kind of franchise to buy. The hard part is finding the right franchisor to buy it from. But it’s not impossible if you keep a few ideas in mind, the most important being that due diligence is a two-way street. Here are five pointers for carrying out effective due diligence. .... >> read more

How to Form an Entity for Your Business

We generally advise both our start-up franchisor and franchisee clients to operate their business as an entity. Far too often, entrepreneurs are unaware that LLCs and corporations are very different. .... >> read more

Franchises Faring Better in Recession

Recessions are no fun for businesses of any kind, and the current downturn has exacted a heavy toll among small businesses in particular. Recession or no recession, however, franchises seem to do better than non-franchise businesses, according to recent data from several sources, so if you're thinking of launching yourself as an entrepreneur, give the industry a good look. .... >> read more

What to do when the Economy Improves

Franchisees struggle during hard times just like other business owners, and some fail. Those who survive, however, are often in excellent position to grow once better times return. Why? Because they have been tested, and they often find that their franchisors, having been tested themselves, need help getting back into growth mode - and who better to provide that help than a franchisee with really good survival skills? .... >> read more

Pay Us Now Or Pay Us Now

Fledgling franchisees, like people launching any business, tend to be optimists, and when they talk about the future, they generally see opportunity, not the threat of failure.

But failure happens in franchising, too, and when it does, it may bring into play a complex, sometimes-overlooked clause in the typical franchise agreement that can prove devastating - the liquidated damages clause.  .... >> read more

Negotiating a Lease

If you think signing a franchise agreement is hard on the nerves, wait till you have to talk with a landlord about a lease. .... >> read more

Common Sense on Item 19

Believe it or not, the courts are capable of exercising common sense when it comes to the one element in the Franchise Disclosure Document that, if sloppily written, can make a plaintiff's attorneys salivate - Item 19.... >> read more

Vicarious Liability: The Hotel Clerk, The Dog, The Bumptious Guest, and the Cousin

The relationship between franchisors and franchisees is a close one, but that doesn't put franchisors on the hook for everything their franchisees do.

So, at any rate, says the California Court of Appeal in the case of the hotel clerk, the bumptious guest, the dog, and the cousin, which is broadly applicable in other states with laws on the books similar to the California Unruh Civil Rights Act. .... >> read more

Initial Franchise Fees and Royalty Fees

Initial franchise fees and royalty fees lie at the heart of franchising, and for start-up and existing franchisors alike, they can prove big stumbling blocks to fashioning a viable business model. .... >> read more

The Case of the Errant Spouse

As a franchisor, do you have the right to terminate a franchise agreement if one of your franchisees gets into trouble with the law? .... >> read more.