Franchise Compliance

For over 20 years The Franchise Design Group has provided companies with custom designed franchise solutions.

FRANCHISING COMPLIANCE

Franchising is a versatile and exciting business tool. It aids in marketing, expansion, funding and strategic positioning.

It is also a legal system complete with federal and state laws and regulations. The Federal Trade Commission and various states enforce franchise disclosure laws and other requirements. Many additional states have business opportunity laws and some states have both.

There is a lot of confusion regarding the difference between a franchise and licenses, distributorships and business opportunities.

Many companies, sometimes to avoid regulation, prefer to license associates or make them distributors. If this fits into your corporate plans you may only require a contract or agreement. Conversely, you may already be a franchise and require full disclosure.

All franchises are licenses, most are business opportunities and some are distributors. How do you differentiate?

	If you require your client to substantially associate their business with your trademark and you provide training or other assistance and collect a fee of $500 or more within 6 months, you probably meet the requirements which trigger the franchise laws and, if you do, you must comply with federal and applicable state laws.
	If you do not require your client to associate their business with your trademark but you provide training or other assistance and collect a fee of $500 or more within 6 months you probably meet the requirements which trigger many state business opportunity laws and, if you do, you must comply with the applicable state disclosure laws.

If you feel your company activities fit into any of the above-described situations and you have not complied with the applicable laws call us or seek professional help immediately. The penalties for non-compliance are severe, and corporate officers may be personally vulnerable.

Have a question? Call The Franchise Design Group professionals at 1-888-655-8850.