THE LAW & Your Franchise

Table of Contents

1)      THE NATURE OF A FRANCHISE
A short introductory chapter to highlight the key issues. The point is to clarify the nature of the franchisor-franchisee relationship and thus to underscore the relevance of the information in this book - kind of a description with sales pitch.

a)      How the Law Defines “Franchise.”
Federal and state definitions/descriptions.

b)      The Uniform Franchise Offering Circular.
What this is and its purpose.

c)      The Franchise Agreement is King.
To make the point that this contract is the single most important source of law and even reality between the franchisor and the franchisee.

d)      Franchisee: Self-Employed and Running Your Own Business.
To clarify the nature of the relationship between the franchisor and the franchisee, that it is not an employer-employee relationship, that they are not partners, but that their relationship is as described in their contract. Also, to make clear how the franchisee remains a self-employed entity running their own business and is, therefore, responsible for all employee and business requirements - in addition to complying with the franchise agreement.

 

2)      THE UNIFORM FRANCHISE OFFERING CIRCULAR

a)      Federal and State Law Requirements.
What federal law and each state’s law - by state - requires of the UFOC as far as purpose, content, and remedies.

b)      Anatomy of the UFOC.
This section will go through a UFOC and explain each part.

 

3)      THE FRANCHISE AGREEMENT AND CONTRACT LAW

a)      What a Contract Is.

b)      How a Contract is Created.

c)      How a Contract is Interpreted.

d)      Written Contracts and Oral Contracts.

e)      Express and Implied Contracts.

f)        How a Contract is Enforced.

g)      Anatomy of a Franchise Agreement
This section will explain each part in detail.

h)      Guidelines for Handling Contracts
Statements and suggestions - general legal advice on how to handle the various issues relevant to contracts.

 

4)      WORKING WITH YOUR FRANCHISOR

a)      What’s In a Name?
Picking a name for your business, as well as considerations for setting up the franchisee’s business. Just because the franchisee is a McDonald’s franchisee, it does not mean they are McDonalds and can act as if they are.

b)      The Franchise Agreement
It may be redundant, but it cannot be emphasized too much that the franchise agreement defines the relationship between a franchisor and a franchisee.

c)      How to Handle Disputes With Your Franchisor
Minor things, petty things, as well as why a franchise cannot be abandoned, options for various situations.

 

5)      EMPLOYEES AND THE LAW

a)      The Employee-Employee Relationship.
This will cover the definition of an employee, employment at will, and the employer’s general responsibility and liability.

b)      Employees are Not Independent Contractors.
To explain the difference between employees and independent contractors and why this difference is significant.

c)      Job Descriptions.
Why they must be used and how to use them, how to create and how to modify them.

d)      Hiring Employees.

e)      Evaluations and Appraisals of Employees.

f)        Quitting, Laying Off, and Firing.

g)      Child Labor Law.

h)      Paying Employees.
Will cover minimum wage laws, overtime, benefits, bonuses, and equal pay laws.

i)        Employment Policies.
What they are, how to use, how to create and modify.

j)        Employee Files.
What information to keep and how to use.

k)      Employee Privacy and Property.

l)        Employee Absences.

m)    Harassment and Discrimination.

n)      The Worksite.
This will cover safety and health - OSHA - issues and the employer’s control over property and equipment, including Internet

o)      Guidelines for Handling Employee Issues
Statements and suggestions - general legal advice - on how to handle the various issues relevant to employees.

 

6)      CORPORATE LAW

a)      The Nature of a Corporation.
What it means to do business as a corporation, including how it is managed, stock, etc.

b)      How to Operate a Business as a Corporation. [This will cover how to protect the corporate veil, how and why to hold shareholder and director’s meetings, keeping minutes, filing the annual report with the state, and doing all the things necessary to be sure to preserve the corporate status; also, with emphasis on the perspective of being a franchisee operating as a corporation.

7)      LIMITED LIABILITY COMPANIES

a)      The Nature of a limited liability company

b)      How to Operate a Business as a limited liability company
with emphasis on the perspective of being a franchisee operating as a limited liability company.

 

8)      PARTNERSHIPS

a)      The Nature of a partnership

b)      How to Operate a Business as a partnership.
With emphasis on the perspective of being a franchisee operating as a partnership.

c)      Limited Partnerships
Nature of one and how to operate as one.

d)      Limited Liability Partnerships
Nature of one and how to operate as one.

e)      Joint Ventures
Nature of one and how to operate one.

 

9)      SOLE PROPRIETORSHIPS

a)      The Nature of a Sole Proprietorship

b)      How to Operate a Business as a sole proprietorship
With emphasis on the perspective of being a franchisee operating as a sole proprietorship.

 

10)  INTELLECTUAL PROPERTY

a)      Copyright: What it is and how it is used in franchises.

b)      Trademark: What it is and how it is used in franchises

c)      Patent: What it is and how it is used in franchises.

d)      Trade Secrets: What it is and how it may be used in franchises.

e)      Licensing of Intellectual Property
Franchisees are authorized to use the trademarks and other IP of the franchisor in specific ways for specific purposes, this section would describe licensing, but with emphasis on the issues that franchisees must understand.

 

11)  DEALING WITH CUSTOMERS
This chapter will cover customer complaints, consumer protection, collections against customers, liability and issues involving customers. It will also include a “Guidelines” section at the end that will be statements and suggestions (general legal advice) for dealing with customers.

 

12)  DEALING WITH VENDORS

This chapter will cover issues relevant to dealing with vendors other than the franchisor.  It will also include a “Guidelines” section at the end that will be statements and suggestions (general legal advice) for dealing with vendors.

13)  DEALING WITH THE GOVERNMENT

a)      Local Government.
Business licenses, zoning, local taxes and issues in working with city and county government.

b)      State Government: State regulations, state taxes, etc.

c)      Federal Government: Same idea as with local and state government.

 

14)  HOW TO USE THE LEGAL SYSTEM

a)      Who’s Who and What’s What.
Identifies and describes the people in the system, judges, lawyers, etc., as well as the various types of courts and cases.

b)      How to Find the Law.
Identifies the sources of law and where to find the law on the Internet for free.

c)      How to Read the Law.
Describes how to read regulations, statutes, and cases, as well as opinions and other legal readings, and understand it all. How to put meaning to the words being read.]

d)      How to Research the Law.
How to ask the right questions and how to find the applicable and relevant answers - starting of course with this book.

e)      How to Sue Someone.
A description of how a lawsuit is handled and how to either do it all yourself, or with a lawyer.

f)        How to Defend Yourself.
How and why to always defend yourself in any type of case, whether with or without a lawyer.

g)      Judgments and Collections.
What a judgment is, what it means, and how one is enforced. Will also describe how to collect money awarded in a judgment. Will also discuss how a bankruptcy effects this process.

h)      Appeals.
A brief explanation of the appeals process and factors for deciding whether to appeal a lawsuit.

 

15)  PLAN FOR THE FUTURE

a)      How Long Do You Want to Be A Franchisee
How to end the franchise relationship - regardless of the reason - and how to do so in compliance with the franchise agreement.

b)      Succession Planning
Determining who will be the owner of your business after you, and how to accomplish this

c)      Co-Owners and Buy-Out Agreements
How to make a smooth transition in ownership when you have one or more co-owners, whether through retirement, death, disability, or just a change in what your co-owner wants to do.

d)      Financial Planning: Establishing goals and a plan for meeting those goals.

e)      Tax Planning
The various types of taxes that can apply and how to make sure they are taken care of, and, that business records will support tax planning decisions.