Business law: the basics of franchising

On Behalf of | Jul 26, 2018 | Business Law

There are a number of ways to start a new business. Some people take a unique idea or an old idea with a fresh twist and start their enterprise by building it from the ground up. Others, though, would rather jump into a business that is already reputable and has supply chains intact. For those in this latter group, franchising can be a great option.

In basic terms, franchising is the process where the owner of a trademark or service mark contracts with another party to allow them to use it for identification purposes in their business. This is probably most often seen in the fast food industry, as McDonalds and Burger King restaurants are franchised from a parent company. As a part of franchising, the franchisee is usually given strict terms to follow so that the franchisor can protect its name and image.

Although these terms may seem onerous to some, they are meant to protect all franchisees by allowing the public to know that it will receive quality goods and services from establishments carrying the franchised trademark or service mark. This means that quality control standards are typically in place and dependable goods are supplied to franchisees.

Deciding to franchise a business is no small feat, though, and it should only be pursued after careful consideration. Although a successful franchise arrangement will allow an entrepreneur to obtain valuable business guidance and materials to hit the ground running, those who fail to fully understand the terms of the franchise agreement can find themselves facing severe hardship, especially if they end up breaching a franchise contract.

Therefore, those who are interested in this line of business, whether it be to start a restaurant, hotel, or automotive repair shop, should think about discussing the matter with an experienced attorney. By doing so, they can obtain a full understanding of what they are about to endeavor and whether or not it is in their best interest. Also, some terms of a business contract may be negotiable, which a skilled business law attorney may be able to adeptly handle. Taking any and all necessary steps to protect yourself and your business is valuable and beneficial.


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