California Franchise LawyerFranchise Disclosure Documents (FDD) & Franchise Agreements
Franchising & Licensing Law
Franchising & Licensing Law
James Cash Penney (J.C. Penney)
Turn Your Business Into a Franchise
So you have a successful and proven business model and brand. You want to expand your success into other markets but lack the resources to do it all on your own. Hopefully, you have already trademarked your business name and logo (if not, we can help). You can license your brand and charge royalties to licensees for that use as one option. For some business models, licensing is the way to go as it is the simplest and least costly route. However, if you want to exert any control over how the business of your brand is managed and operated and ensure uniformity and quality, then the law will require you to franchise your brand/business rather than merely license it.
Franchising is a great way to expand your business by selling your proven and successful brand and business model to other entrepreneurs who want to profit from running their own business by duplicating the success of your model without having to reinvent the wheel themselves. Each franchisee pays an upfront initial franchise fee and ongoing monthly royalties that can add up to huge success and profits for your business and brand.
Franchise Disclosure Document Preparation
Since franchising in the United States is regulated by the Federal Trade Commission and in California by the California Department of Business Oversight, you will need to prepare and register a Franchise Disclosure Document prior to offering and selling franchises in California. The strict compliance enacted to protect consumers and unsophisticated investors requires a competent and experienced Franchise Law Attorney, like the Heieck Law Center, to position you as a qualified franchisor.
Once your FDD is completed and FTC-compliant, you can offer your franchise for sale in any state without its own separate registration or business opportunity requirements. Many investors seek to purchase franchises which are advertised in publications such as Entrepreneur magazine and at various franchise expos across the country and internationally. Creating an FDD compliant within FTC guidelines is the first step in entering the exciting and lucrative world of selling franchises and your model for success to other entrepreneurs. As you can see below, there are less obstacles to selling franchises in some states than in others. However, due to California’s strict registration laws and guidelines, if your FDD is registered in California, compliance with any other state’s business opportunity and registration laws will be relatively pain free from there. But, in states requiring registration, you will need to update the FDD registration annually to continue selling franchises in those states.
The following states have no franchise registration or business opportunity laws or requirements: Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Washington D.C., Idaho, Kansas, Massachusetts, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oregon, Pennsylvania, Tennessee, Vermont, West Virginia, and Wyoming.
The following states have business opportunity laws enacted with certain available exemptions to registration such as FTC compliance, federal trademark registration, exemption filing with the payment of filing fees, etc.: Connecticut, Florida, Georgia, Indiana, Iowa, Kentucky, Louisiana, Maine, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, Texas, and Utah.
The following states require that the FDD be registered in their state prior to offering a franchise for sale in their state: California, Hawaii, Illinois, Maryland, Michigan, Minnesota, New York, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.
Our San Diego Law Center Can Help
Heieck Law Center can help you expand your business through licensing, franchising opening company-owned stores or through a combination of corporate stores and franchises, depending upon your company’s resources and goals.
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