Knowledge needed to start Businesses
By Ronna Kaleah
By Ronna Kaleah
The dream of owning a business is one shared by millions of
people. Getting out of the traditional workforce and securing a piece of
the entrepreneurial spirit is a driving force for many, but oftentimes
potential business owners have no idea where to start. If you want to
run a business, but do not have a product or service of your own to
market, you may want to consider owning a franchise. In simplest terms, a
franchise is a business that markets an already existing product or
service that is owned by another company.
The franchisor will grant the franchisee a license to market their product. Notable examples include popular fast-food chains, such as McDonalds and Starbucks. The individual companies are selling a product that is not owned directly by them, but they get a portion of the profits. Franchises are very popular among start up businesses, because they allow new owners a quick opportunity to start earning their own income. The legal relationship can be a bit complicated, however, so if you are considering starting your own franchise, here are some helpful tips to remember.
The legal basics of owning a franchise
Get all agreements on paper
Obligations
Can you renew your license?
Territory
Provisions for termination
After hiring an attorney that specializes in franchise law, you will want to get all of your agreements with the corporate headquarters in writing. A contractual agreement is binding; you should never accept or agree to any terms verbally. This is the cardinal rule of doing business, so make sure all of you have all of the proper documentation.
When you own a franchise, you are subject to certain obligations put in place by the franchisor. Their may be restrictions put in place that prevent you from outsourcing the business operations to another entity. You also may be restricted from partnering with other franchises. Knowing what the terms are to your contract will better help you understand what you capabilities are.
Given that you will be granted a license to run your franchise, you will want to know the terms of your renewal. All licenses expire, and there may be conditions put in place that can restrict you from renewing them. For instance, if you do not meet a certain quota for product sales, your contract could be terminated.
When you run a franchise, you are assigned a specific territory for running your operations. Make sure you select a location that is going to be profitable, because there will likely be provisions in place that restrict you from expanding your operations elsewhere. Franchisors are strict when it comes to territory, and may even require you to relocate your business if it is not meeting certain profit margins. Will you have the ability to move if need be? Lastly, when you sign the contract with the franchisor, you are legally obligated to run the business. This means you cannot simply close up shop when you feel like it. The legal ramifications of doing so can be very serious, so know what provisions are in effect for terminating the contract on both ends.
The franchisor will grant the franchisee a license to market their product. Notable examples include popular fast-food chains, such as McDonalds and Starbucks. The individual companies are selling a product that is not owned directly by them, but they get a portion of the profits. Franchises are very popular among start up businesses, because they allow new owners a quick opportunity to start earning their own income. The legal relationship can be a bit complicated, however, so if you are considering starting your own franchise, here are some helpful tips to remember.
The legal basics of owning a franchise
Get all agreements on paper
Obligations
Can you renew your license?
Territory
Provisions for termination
After hiring an attorney that specializes in franchise law, you will want to get all of your agreements with the corporate headquarters in writing. A contractual agreement is binding; you should never accept or agree to any terms verbally. This is the cardinal rule of doing business, so make sure all of you have all of the proper documentation.
When you own a franchise, you are subject to certain obligations put in place by the franchisor. Their may be restrictions put in place that prevent you from outsourcing the business operations to another entity. You also may be restricted from partnering with other franchises. Knowing what the terms are to your contract will better help you understand what you capabilities are.
Given that you will be granted a license to run your franchise, you will want to know the terms of your renewal. All licenses expire, and there may be conditions put in place that can restrict you from renewing them. For instance, if you do not meet a certain quota for product sales, your contract could be terminated.
When you run a franchise, you are assigned a specific territory for running your operations. Make sure you select a location that is going to be profitable, because there will likely be provisions in place that restrict you from expanding your operations elsewhere. Franchisors are strict when it comes to territory, and may even require you to relocate your business if it is not meeting certain profit margins. Will you have the ability to move if need be? Lastly, when you sign the contract with the franchisor, you are legally obligated to run the business. This means you cannot simply close up shop when you feel like it. The legal ramifications of doing so can be very serious, so know what provisions are in effect for terminating the contract on both ends.
Siskinds
represents financial institutions, businesses and individuals by
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sensible and speedy manner.
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