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California business franchises

A franchise is a legal agreement by which a business is allowed to use the name, service mark, advertising symbol or trademark as an identifier under which they do business. When a business purchases a franchise from a company, the business will then have formed a commercial and legal relationship with the franchisor.

When a person or business is considering purchasing a franchise, it is important for them to carefully review the company's financial information. It is also important to understand the most current versions of controlling regulations as they frequently change. Securing funding in order to purchase the franchise is also necessary.

When a careful analysis has been completed and funding is in place, the intended franchisee will be provided with a franchise agreement. Such an agreement must be carefully reviewed prior to signing as it is a legally enforceable contract. Many of these agreements are written in dense legal language that may be difficult to understand. Additionally, businesses and individuals interested in purchasing a franchise should negotiate its terms with the franchisor. Although many franchisors will claim their contracts are non-negotiable, like any business transaction, its terms are normally negotiable as it involves two parties entering into an agreement. Franchisees should thus try to protect their interests as much as possible through a carefully executed negotiation.

A franchise of a successful company can be profitable, but care should be taken in order to ensure the property is in a good location and that such things as needed easements are in place. Businesses and individuals considering the purchase of a franchise may be prudent by seeking the help of a commercial law attorney. An attorney may be able to review the financial data and contract, negotiate terms with the franchisor and assist his or her clients with securing funding.

Source: Findlaw, "What is Franchising Law?", December 17, 2014

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