5 FAQs about Franchise Laws in Florida

by | Mar 31, 2016 | Business Litigation

If you are thinking about purchasing a franchise in the state of Florida, then you likely have a number of questions about making this type of business decision before you decide to move forward with this type of agreement.

Read on for some answers to the top five FAQs about franchise laws in Florida. You can also check out this site here.

1. What is Franchising?

Simply put, franchising allows a business owner to expand a business by allowing independent franchisees to use the logo, method of operation, and business name to sell a particular service or product.

In return for this potential, the franchisee is responsible for paying the franchisor a franchise fee as well as ongoing royalty payments.

There are typically three different types of franchise businesses in Florida:

  • Business format franchises – The business operates under the trade name of the franchisor and is typically required to follow the operating procedures of that franchisor.
  • Manufacturing franchises – The essential ingredients or basic information about making a product are provided to the franchisee.
  • Distributorships – A franchisor gives license to another person to exclusively sell the franchisor’s product.

2. What Is a Franchise Disclosure Document?

This is a legal document that franchisors need to provide to franchisees that are considering becoming involved with the business. This is required under federal trade commission rules.

You should always see a document like this before you begin a relationship with a franchisor, as this is part of the company’s responsibility Be sure to evaluate the contents of this document carefully with a Florida Contract Litigation Attorney.

Any prospective franchisees must be provided these details at the first meeting with the franchisor. This gives the franchisees the opportunity to learn more about the investment and to make an educated decision about the franchisor before purchasing.

This includes a listing of all recently departed and current franchisees and more details about operating the franchise.

A franchise disclosure document also provides the following details:

  • Litigation history for the company
  • Operating expenses
  • Initial investment
  • Advertising
  • Termination policies

3. What Kinds of Businesses May Be Franchised?

Although fast food restaurants are some of the most common examples of franchises today, practically any kind of business can be franchised. A franchise business might sell services or products at wholesale or retail, from home or from a storefront.

There are several different kinds of popular franchise businesses including:

  • Printing services
  • Hotels
  • Pharmaceutical companies
  • Bakeries
  • Cleaning businesses
  • Construction firms
  • Fitness centers
  • Furnishing outlets and restaurants

4. What Are the Most Common Kinds of Agreements Involved with Franchising?

Outside of the franchise disclosure document, all franchisees need to sign a franchise agreement describing their general relationship between the franchisee and franchisor.

There may be additional documents required such as:

  • Software licensing
  • Technology
  • Collateral issues
  • Powers of attorney
  • Non-competition agreements

There may also be personal guarantees for the owners of the franchise entity as it relates to performance of the franchise. Furthermore, a franchisee may also be engaged in contracts with third party vendors like landlords.

5. Who Regulates Franchising?

In the United States, franchising falls under the umbrella of the U.S. Federal Trade Commission as well as state agencies. The franchise rules from the FTC applies throughout the United States, but a state’s franchise laws may also be in play if the sale or offer of franchise is made in the state.

Ask a Florida Contract Litigation Attorney

Getting involved in a franchise is a big decision, and one that needs to be considered carefully. Read this article here to learn more about what you should consider before getting involved in a franchise.

If you have more questions about starting a franchise, then do yourself a favor and speak with a Florida Contract Litigation Attorney today.

Having an attorney’s insight at the outset of your relationship as a franchisee can be very beneficial, and can help you review all areas of your contract, and even determine how to avoid contract or business fraud.

Visit here to get started with a Florida Contract Litigation Attorney today.


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