Franchise Legal

Get the backing of lawyers with decades of experience in franchise law to seamlessly build and integrate your Entity Creation, UFDD, Individual and Area Development Agreements, Intellectual Property, and Buy-Sell Agreements, along with any other customized needs or litigation support in the future.

Franchise Science both retains and has its clients retain incredibly talented lawyers in the field of franchise law.  FSI is not a law firm, but rather works closely with highly qualified attorneys in franchise law, intellectual property law, and franchise litigation to insure that the Uniform Franchise Disclosure Document and all applicable franchise contracts and ancillary license agreements and partner agreements are managed by responsible attorneys who enjoy working with FSI as part of the project team.  This connectivity insures the strong connection desired between Legal, Strategic Planning and Operations, connecting each phase’s activities with teams that work together seamlessly so all of the planning and legal documents “talk to each other” for the best results and structure.

Once your Strategic Plan is completed for your franchisor organization, both the economics of the franchise business and the strategic reasoning for each activity of the business have been fully defined to the extent possible.  During the planning phase, extensive consulting and Q&A have already occurred in which decisions such as Royalty Percentages to the franchisee have been determined, along with any up-front fees to acquire a territory/unit or multiple units.  All of these delicate decisions made in the Strategic Planning meetings  and completed on required questionnaires are further discussed, modified as-needed, and included in the UFDD disclosures, along with all relevant contracts.  This is why Strategic Planning is always done “first” so we can carefully flow into any questions the attorneys may require to create your package.

For any franchise based in the U.S., you will start with the UFDD, and then create (at minimum) and Individual Franchise Agreement.  Franchisors planning to scale using qualified Area Developers (Area Development Agreement Required) also add the AD Agreement, but in any case, still need to start with the individual agreement to begin their package.  Once the UFDD disclosures are prepared and the individual and area development agreements are defined, a new entity is formed for the franchise company.  This entity could be one of a multitude of appropriate legal structures, from an LLC, S-Corp, C-Corp, or any other legal structure which client’s attorney and CPA suggest is best for the client’s purposes and tax positioning.

When a company or individual is a client of Franchise Science, they are automatically invited to our   frequently held 3-Day Seminars, and invited to attend these as they occur in Santa Barbara, California, or other various live locations.  Our 3-day seminars include Day-1, Franchise Marketing, Day-2, Franchise Sales…… and relevant to this discussion,  Day-3 Franchise Legal and Operations.  Therefore, a client attending Day-3 can get  very comprehensive overview of all things legal from the same lawyers who prepare their documentation above and can do it at the most convenient seminar for their schedule.  For clients who want to review legal requirements, entity structure or any other fundamentals of franchise law for new franchisors, recordings of past sessions can be provided to stream if a live session is not convenient.  However, none of the FSI sessions or training is a replacement for responsible planning directly with the attorney to customize client’s contracts in the most ideal way, so sessions will be held early on to process client’s legal regardless of any seminar participation.

There are many options, present and future, for franchising your business.  Although we do not encourage jumping into any kind of international development speaking, the franchise attorneys are more than capable of drafting any kind of international franchise agreement using partners in various countries of interest, as well as any domestic Master Franchise Agreement or other Sub Franchise documents.  Once client’s legal phase is started, all of the required documents will be explained in full directly by the appropriate attorney.

Additional items other than Entity Formation, and UFDD/Contract build to consider for any new franchisor  are the following:

• Status of client’s TRADEMARKS or any applicable intellectual property relevant to the franchisor company model
• Buy-Sell Agreement: If the new franchisee entity has more than one person as an owner, such as a business partner or other common ownership, it is many times advisable to create an agreement to protect the partners for any unforeseen situation in an “if this, then that” situational format.  This is especially critical in the case of illness or death or other incapacity to function to allow for smooth transitions and documented checklist protocols for all franchisor partners concerned.

Once all of the documentation for your legal needs are defined and created, you are legal to be a franchise in non-registration and non-filing states.  However, there are twenty-three states in the U.S. which require registration or filing, along with the applicable starting fees and renewal fees for their individual states.  Clients may wish to manage both new registrations and ongoing compliance themselves and automate this process through one of the myriad of franchisor software packages and self-administrate the state requirements.  However, most FSI clients have their franchise attorneys manage their compliance on a carefully tracked compliance calendar.  Both ways are acceptable.  Costs of registrations fees and renewal charges change from time to time, but we have a current list here:

Registration & Filling Costs and Renewals

Franchise Law is a specialty, and the complexities of compliance can be quite daunting if a client does not have proper representation.  Regardless of how you launch your franchise or other development journey, please do proper due-diligence to insure that your attorney has the franchise specialization and experience to represent you prior to preparation of your UFDD and franchise contracts.

Using FSI’s preferred franchise attorneys significantly improves the overall franchise modelling and communication process by fusing together all inputs from Strategic Planning and Operations to Legal and Compliance  by making council part of the team and having all parties involved in your development on the same page, reviewing and counselling on each piece of the puzzle as needed.  We prefer the full team approach to avoid any fragmentation in our development process.