Although the COVID-19 pandemic has put many Florida businesses in a state of financial distress, there are plenty of investors looking to start their next project. If you are an investor in the Orlando area who is considering entering into a franchise agreement, there are a few things you need to understand before you sign any sort of contract.
If you are looking to receive hands-on assistance with your next business venture, then perhaps buying into a franchise might be a suitable option for you. A franchise “is a business model where one business owner (the “franchisor”) sells the rights to their business logo, name, and model to an independent entrepreneur (the “franchisee”). McDonald’s, GNC, and Wendy’s are some of the more common types of franchises an entrepreneur can buy into, however, they are also among some of the more costly ones to invest in.
Now, there are two common forms of franchising which include:
- Product/trade name franchising. Under this type of franchising agreement, the “franchisor owns the right to the name or trademark of a business and sells the right to use that name and trademark to a franchisee.” The franchisor would also manufacture or supply products to the franchisee to sell.
- Business format franchising. Under this type of franchise agreement, the SBA says the relationship between the franchisor and the franchisee is ongoing. The franchisor would typically help the franchisee choose a site, provide them with training, product supply, and marketing plans, and also help get them funding.
If you’re considering buying into a franchise, you should contact Legal Counsel P.A. to speak with an Orlando, FL business law attorney who would be happy to discuss the process more in-depth. The SBA also recommends those looking to franchise to explore the following:
- Any and all existing reports.The SBA says that if you obtain a Uniform Franchise Offering Circular (UFOC), the form will provide you with “vital details about the franchise’s legal, financial, and personnel history.”
- Associated rules and regulations. Find out more about what rights you will have should you enter into a franchise agreement with a company as well as what services the company offers (i.e. training, marketing, etc.)
- If you have already settled on a company you want to franchise with, be sure to review the contracts to ensure you understand all the terms and conditions outlined in it before signing. If you have already obtained a copy of the contact, contact Legal Counsel P.A. so that an Orlando, FL business contract attorney can review it with you.
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