FDD AND FRANCHISE AGREEMENT
The FTC and 25 states regulate business opportunities, and the franchising lawyers at the Franchise & Business Law Group has helped set up business opportunities that keep our clients’ needs at the forefront—providing them with a state-specific franchise disclosure document, a contract or agreement to purchase the opportunity, and other related documents and requirements, such as intercompany license agreements, trademark registration and entity formation. Contact our franchising lawyers today for a free consultation.
Franchise Documents to Review
If you have any experience starting a business, you’re probably familiar with the volume of paperwork involved in the process. Various documents must be carefully reviewed and signed before legally operating a business, and franchising is no different. A franchised business is heavily regulated by the FTC, who set clear guidelines for both parties in the relationship—the franchisor and franchisee.
As a potential franchisee, you’ll be expected to review and agree upon several documents before obtaining the right to operate under the franchise. Two critical documents are known as the Franchise Agreement and Franchise Disclosure Document (FDD). Although they appear to be similar, they serve two distinct purposes:
- Franchise Disclosure Document – The FTC mandates that a franchisor provides this document to the franchisee at least 14 days before the Franchise Agreement is signed or before fees are accepted for the sale. This disclosure period is meant to allow the franchisee to properly review the FDD with a franchise attorney. The prospective franchisee should be properly educated about the franchise after reviewing this document. You can learn more about the 23 items of an FDD by visiting the Federal Trade Commission’s website and reading “A Consumer’s Guide to Buying a Franchise.”
- Franchise Agreement – This is the legal document signed by both the franchisor and franchisee. It states that the franchisee has the right to operate its business while using the franchisor’s resources such as its trademark, suppliers, and more. It also defines both parties’ obligations. The franchisee will agree to certain terms about where it can operate and how it should manage royalties and marketing duties. In return, the franchisor will be obligated to provide a certain level of support and training.
Partner With an Experienced Franchise Attorney
Whether you’re looking to become a franchisee or you want to expand your business into a franchise, the attorneys at Franchise & Business Law Group are here to help. Our team is well experienced in franchise law, so you can be confident in knowing that the Franchise Disclosure Document and Franchise Agreement are carefully reviewed. Contact our franchise attorneys today to schedule a free consultation.