Franchisee

Owning a franchise disadvantages

1. You're not completely independent franchises operate on procedures and restrictions set forth by the franchisor were in the franchisee agreement this includes products being offered pricing and geographic territory. 2. Initial franchise fee franchisees must pay on going royalty and advertising fees 3. Franchisees must be be careful to balance restrictions and support provided by the franchisor with their own ability to manage the business 4. It damaged systemwide images can result in other franchisees performing poorly. 5. The duration of the franchise agreement is usually limited and the franchisee may have little or no say about the terms of a termination

Franchise agreement

the contractual arrangement between a franchisor and franchisee that spells out the duties and responsibilities of both parties

What are the seven advantages of owning a franchise

1. you can go into business for yourself but not by yourself 2. you could have a certain level of independence 3. Established product or service widespread name recognition4. increased chance of business success according to the SBA less than 5% of franchise units fail each year. 5. Franchises me off for consumers the attraction of quality and consistency. 6. Franchises offer re-opening support such as site selection design construction financing training grand opening. 7. They offer ongoing support training advertising operating procedure ongoing supervision and management support increase spending power an accessible purchasing.

How many days is the cooling off period that perspective franchisee must have to think about their decision before being allowed to sign a franchise agreement?

14 or the 14 day rule

Product distribution franchisee

A franchise where the franchisee simply sells the franchisors products without using the franchisors method of conducting business

Franchise

A license that describes the relationship between the franchisor or franchisee including use of trademarks, fees, support and control

Franchising

A method of business expansion characterized by a trademark license, payment of fees, and significant assistance and or control

franchise agreement

A more specific agreement then the FDD about the terms of the relationship between the franchisor and franchisee

The disclosure document

The FDD is designed to give you some of the information you need in order to make an informed decision about investing in a particular franchise by law a franchisor cannot sell a franchise until the franchisor has been presented the prospective franchisee with the disclosure document in fact 14 states require franchisors to register their FTD with the state or to notify them that they will offer a franchise this before they begin to conduct the franchises activity in the state.

What are the two main franchising legal documents

The disclosure document or FDD and the franchise agreement

What information is included in the franchise agreement

The franchise system such as trademarks and products, territory, rights and obligations of the parties standards and procedures training assistance advertising etc., term duration of the franchise, payments made by the franchisee to the franchisor, termination and rights to transfer the franchise.

What does the FDD include information about?

The franchisor, a company key staff, the management experience in franchise management, the franchisors bankruptcy in litigation history, initial and ongoing fees involved an opening in running the franchise, required investment in purchases, territory rights, responsibilities of the franchise or and franchisee, other franchisees in the system with contact information

Trademark

The marks, Brand name and logo that identify a franchise or which is licensed to the franchisee

Franchisor

The person or company that grants the franchisee the right to do business under their trademark or tradename

Royalty

The regular payment made by the franchisee to the franchisor usually based on a percentage of the franchisees gross sales