Franchising your business can bring a new revenue stream, but offering a business model or product for the purpose of franchising is a serious legal undertaking. You must compose a franchise agreement outlining each party’s obligations and you may need to file a franchise disclosure document with the State before offering a franchise for sale.
The content and form of these documents play a major role in the legal rights and obligations of all franchisors. A franchise lawyer could help you understand the language of these documents and take the proper steps to protect your legal rights as a franchisor. A North Carolina franchise document review lawyer could help evaluate your franchise disclosure document and existing franchise agreements, draft new franchise agreements, and help meet state requirements to operate as a franchisor.
A business owner cannot simply make the decision to offer franchise opportunities immediately. Even if an owner already has potential buyers lined up, it is illegal to offer franchises without first registering as a seller with the North Carolina Secretary of State or being exempt from registration.
North Carolina General Statutes §66-95 dictates that a franchisor must provide a franchise disclosure document that includes the seller’s financial position, as well as a disclaimer that the State does not endorse this opportunity and that the potential buyer has the right to review the document with their own attorney. A franchise disclosure agreement should additionally contain comprehensive information concerning the franchisor-franchisee relationship and the associated legal rights and obligations.
A franchise disclosure document must contain all information in the final agreement, written out in a way that can be readily understood. A Charlotte franchise document review attorney could help explain the filing requirements when offering franchise opportunities and help create these documents.
Franchise agreements are legally binding contracts that require each party to uphold their end of the bargain. The terms of these agreements are what the parties negotiate them to be, and the State generally does not intervene in contract disputes.
A franchise document review lawyer in North Carolina could help evaluate the language and terms of existing franchise agreements, including an examination of the protections for intellectual property rights, a franchisor’s obligation to provide assistance to a franchisee, and how a franchisee must provide payments to their franchisor. In cases where change is necessary, legal counsel could also help negotiate a revision to existing franchise agreements.
Every franchisor-franchisee relationship begins with the use of a franchise disclosure document that explains the franchise opportunity as required by the State, as well as a franchise agreement providing the exact terms that the franchisor and franchisee must follow. A failure to draft and provide proper documents can affect your rights and may lead to legal trouble with the State. Call a lawyer today for help.