Franchise registration

Franchising is a form of business in which the owner (franchisor) of a product, intellectual property, or a unique production method (know-how) expands the presence of their product through affiliated dealers (franchisees). In exchange for the right to use the trademark, receive ongoing support from the franchisor, and operate under the franchisor’s business system, the franchisee pays an initial fee and royalties.

Purchasing a franchise offers entrepreneurs many advantages compared to starting a business from scratch. One of the key benefits is access to a proven business system that helps avoid many mistakes typical for first-time business owners. The franchisor, having prior experience, has already developed daily operational processes, which reduces risks for the new franchisee.

Franchisor and Franchisee: Basic Conditions

The first step for a potential franchisee is obtaining the Franchise Disclosure Document (FDD). The purpose of the FDD is to provide detailed information about the franchisor, the franchise system, and the terms of the agreements to be signed. In the United States, the provision of the FDD is regulated by the Federal Trade Commission (FTC). The franchisor must provide this document to a potential franchisee at least 14 days before signing any agreement or making any payment.

The FDD includes 23 sections, such as:

Information about the franchisor and key company personnel.
The management team’s experience in operating a franchise.
The franchisor’s litigation and bankruptcy history.
Initial and ongoing fees associated with launching and operating the franchise.
Required investments and purchases.
Real estate rights.
The obligations of both franchisor and franchisee.
Information about other franchisees in the system, including contact details.

After the FDD is provided, the “14-day rule” applies, giving the franchisee time to carefully consider their decision before signing the franchise agreement.

The Franchise Agreement

The franchise agreement is a legally binding document that defines the terms of cooperation between the franchisor and the franchisee. It is strongly recommended to seek qualified legal assistance when entering into such an agreement, especially if it is with a foreign company. The agreement typically covers:

The franchise system, including the transfer of rights to use intellectual property and products.
The territory where the franchisee may operate the franchise system.
The rights and obligations of the parties, including standards and procedures.
The term (duration) of the franchise.
Payments made by the franchisee to the franchisor.
Termination and/or transfer conditions of the franchise.
Training, support, and advertising.

A potential franchisee should carefully review the agreement and consult with a lawyer before signing.

Our Services for Franchisees

Review of franchise (concession) agreements.
Trademark verification and confirmation of intellectual property rights.
Legal support for purchasing a franchise (agreement review, adapting standard provisions, amending for international contracts).
Assistance in resolving disputes with franchisors (claims settlement and court representation).
Ongoing legal support for franchisee operations, including cooperation with foreign franchisors.
Support with franchise termination procedures.
Audit of existing documents and preparation of missing documents required for proper legal structuring of the franchise.
Protection of franchisor’s intellectual property rights, including trademark registration, agreements with developers, license agreements, and implementing trade secret regimes.
Legal structuring of employment relationships within the franchisor’s company, including non-disclosure agreements and copyright contracts.
Legal support for relationships with companies involved in franchise preparation and promotion.
Drafting franchise (concession) agreements.
Legal support for franchise sales transactions.
Support with franchise termination procedures.

Turning to professionals in the field of franchising helps ensure successful and lawful business operations, minimizing risks and ensuring compliance with all necessary requirements.