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Expert Franchise Compliance Services
Your franchise documents are critically important to the success of your franchise organization. Surprisingly your documents not only affect your ability to you protect your organization from compliance challenges, they can also affect your franchise sales growth. Well conceived and written franchise documents are concise, clearly define the franchisor/franchisee relationship and do not create undue concerns by qualified franchise candidates.
Our experienced franchise consultants know which questions to ask to ensure that every aspect of your business is properly reflected in the Franchise Disclosure Document (FDD), Franchise Agreement and other related documents.
The items outlined below are provided within an industry standard FDD and Franchise Agreement. These as well as many additional franchise development items and services are provided under the BDC "FRANCHISE FUNDAMENTALS PROGRAM".
Franchise Disclosure Document and Franchise Agreement
The Federal Trade Commission (FTC) requires 23 items to be disclosed in the FDD concerning the franchisor and provisions contained in the Franchise Agreement. Our franchise consultants advise you concerning the terms of the franchise relationship and assist you in completing our proprietary questionnaire. The system and processes used by our consulting attorneys when developing the documents ensure that all aspects of your business are fully identified and properly disclosed.
The FDD, Franchise Agreement and Exhibits are prepared in conformance with the FTC Franchise Rule. This enables you to begin granting franchises in 36 non-registration states upon completion of the documents. Fourteen states (CA, HI, IL, IN, MD, MI, MN, NY, ND, RI, SD, VI, WA and WI) have individual registration requirements that must be met prior to soliciting and selling franchises in those states (please see Registration State Filings below). Our franchise consultants complete these filings as required based on your company's expansion goals.
Five of the 36 non-registration states require the filing of a simple exemption form, which we coordinate prior to launching the franchise (see State Exemption Filings below). Six states (CT, GA, LA, ME, NC and SC) have requirements that must be met if a franchisor does not have a federally protected trademark (a state registered trademark is accepted by GA, LA and SC). If you do not have a federally protected trademark (which is common with new franchise companies), please contact us for additional information and requirements.
The State Specific Addendum to the Disclosure Document and Franchise Agreement are prepared by our consultants as part of the franchise development process to ensure compliance with individual state franchise laws when registering in the 14 registration states. The State Specific Addendum addresses individual state franchise laws and regulations that vary from the FTC franchise rule relative to specific provisions of the Franchise Agreement and/or disclosure requirements. These documents help expedite the registration process. In addition, the relationships our lawyers have with the various franchise state examiners further streamline the registration process for clients.
Exhibits to the FDD & Franchise Agreement
The following exhibits and attachments to the FDD and Franchise Agreement are prepared by our consultants based on your operation and system:
The Franchise Fee, Royalty Fee, and Other Sources of Revenue
Using established criteria as well as statistics compiled from similar type companies, we help you determine the franchise fee, royalty fee, advertising and marketing fees, and other fees appropriate to the franchise operation. We also provide recommendations and considerations related to other possible sources of franchise revenue, including promotional fees, administrative fees, regional and national advertising fees, product sales, training and field support fees, and other franchise services.
Registration State Filings
Our consultants prepare applications and documentation for filing the company’s franchise in one or more of the registration states. The majority of the registration states require that a franchisor be registered prior to offering or selling franchises in the state.
Trademarks, Service Marks & Copyrights
As part of the document development process, we advise you concerning trademarks, service marks and copyrights that your company may license to franchisees. If required, we assist in filing copyright and trademark registrations on your behalf.
Reporting Requirements and Performance Standards
Franchisees are typically required to provide information to the franchisor regarding sales, financial data, income and sales tax returns, and other information specified by the franchisor. We advise you concerning appropriate reporting requirements relative to the franchise business and your operation. In addition, we provide recommendations regarding minimum performance standards, revenues and/or inventory purchasing requirements when appropriate. When performance standards and/or inventory purchasing requirements are implemented, they are included in the Disclosure Document in compliance with the FTC franchise rule.
Exclusive Territories
Franchisors may grant franchisees an Exclusive Protected Trade Territory in which to operate the franchise. Our franchise consultants advise you concerning the criteria and system to be used to establish exclusive territories. The FDD and Franchise Agreement outline the territory criteria and identify the franchisee’s rights to the territory.
Site Requirements and Specifications
Franchisors may choose to offer assistance to franchisees relative to selecting a site for the franchise business. Franchisors have the right to dictate the type, style, size and other criteria specific to the franchise location. We consult with you to establish appropriate requirements and criteria for the site selection process. As part of this process, we produce a Site Evaluation Form to be completed by franchisees. If the franchise business is home-based, we assist in determining specifications and requirements for a home office.
Franchise Support Services
We consult with you concerning the types of support services that should be provided to franchisees during the pre-opening period and once their franchise is operational. We also advise you concerning additional support services that may be required as the franchise grows. This ensures that proper disclosures are made while permitting you to make modifications to the types and amounts of support provided to franchisees as changes to the system are made.
Area Developer Agreement
An Area Developer program permits a franchise company to sell multiple franchises to a single franchisee for development over a prescribed time period. A percentage of the franchise fee for each franchise to be opened is typically paid in the form of a development fee upon execution of the Area Development Agreement. As part of the preparation of the disclosure document, we advise you concerning the structure and requirements for the Area Developer program. Our franchise consultants prepare the Area Development Agreement as an exhibit to the Disclosure Document. This ensures that disclosure requirements are met and multiple-unit opportunities are immediately available.
Master Franchise Agreement
We advise you concerning the appropriate structure, requirements, and policies for implementing a master franchise program. One form of a master franchise program permits the company to grant a franchisee the right to act in a sub-franchisor capacity within a master development territory. The master franchisee (or sub-franchisor) is granted the right to open and operate individual franchises, as well as offer other individuals the right to operate franchises within the territory. The master franchisee may be responsible for qualifying, selling, training, and supporting the franchises within their territory to all or some extent. A master franchise fee is typically charged based on a number of variables. Franchise fees and royalties generated from sub-franchises within the territory may be shared by the franchisor and the master franchisee. Our franchise lawyers prepare the master franchise agreement and sub-franchise agreement as exhibits to the Disclosure Document or within a separate Disclosure Document, depending on the client’s preference. Please contact us for additional information.
The Consultation is Free!
Click here today to discuss how we can provide you real savings while producing far better results!
Your franchise documents are critically important to the success of your franchise organization. Surprisingly your documents not only affect your ability to you protect your organization from compliance challenges, they can also affect your franchise sales growth. Well conceived and written franchise documents are concise, clearly define the franchisor/franchisee relationship and do not create undue concerns by qualified franchise candidates.
Our experienced franchise consultants know which questions to ask to ensure that every aspect of your business is properly reflected in the Franchise Disclosure Document (FDD), Franchise Agreement and other related documents.
The items outlined below are provided within an industry standard FDD and Franchise Agreement. These as well as many additional franchise development items and services are provided under the BDC "FRANCHISE FUNDAMENTALS PROGRAM".
Franchise Disclosure Document and Franchise Agreement
The Federal Trade Commission (FTC) requires 23 items to be disclosed in the FDD concerning the franchisor and provisions contained in the Franchise Agreement. Our franchise consultants advise you concerning the terms of the franchise relationship and assist you in completing our proprietary questionnaire. The system and processes used by our consulting attorneys when developing the documents ensure that all aspects of your business are fully identified and properly disclosed.
The FDD, Franchise Agreement and Exhibits are prepared in conformance with the FTC Franchise Rule. This enables you to begin granting franchises in 36 non-registration states upon completion of the documents. Fourteen states (CA, HI, IL, IN, MD, MI, MN, NY, ND, RI, SD, VI, WA and WI) have individual registration requirements that must be met prior to soliciting and selling franchises in those states (please see Registration State Filings below). Our franchise consultants complete these filings as required based on your company's expansion goals.
Five of the 36 non-registration states require the filing of a simple exemption form, which we coordinate prior to launching the franchise (see State Exemption Filings below). Six states (CT, GA, LA, ME, NC and SC) have requirements that must be met if a franchisor does not have a federally protected trademark (a state registered trademark is accepted by GA, LA and SC). If you do not have a federally protected trademark (which is common with new franchise companies), please contact us for additional information and requirements.
The State Specific Addendum to the Disclosure Document and Franchise Agreement are prepared by our consultants as part of the franchise development process to ensure compliance with individual state franchise laws when registering in the 14 registration states. The State Specific Addendum addresses individual state franchise laws and regulations that vary from the FTC franchise rule relative to specific provisions of the Franchise Agreement and/or disclosure requirements. These documents help expedite the registration process. In addition, the relationships our lawyers have with the various franchise state examiners further streamline the registration process for clients.
Exhibits to the FDD & Franchise Agreement
The following exhibits and attachments to the FDD and Franchise Agreement are prepared by our consultants based on your operation and system:
- Deposit Agreement
- Confidentiality & Non-Competition Agreement
- Area Development Agreement (see section Area Developer Program below)
- Site Selection Addendum (if required)
- Lease Assignment & Addendum to Lease Agreement (if required)
- Telephone Number & Directory Advertising Assignment Agreement
- Operation Manual Table of Contents
- Franchisee Compliance Certification
- List of State Administrators
- List of State Agents for Service of Process
- State Specific Addendum to the Disclosure Document
- State Specific Addendum to the Franchise Agreement
The Franchise Fee, Royalty Fee, and Other Sources of Revenue
Using established criteria as well as statistics compiled from similar type companies, we help you determine the franchise fee, royalty fee, advertising and marketing fees, and other fees appropriate to the franchise operation. We also provide recommendations and considerations related to other possible sources of franchise revenue, including promotional fees, administrative fees, regional and national advertising fees, product sales, training and field support fees, and other franchise services.
Registration State Filings
Our consultants prepare applications and documentation for filing the company’s franchise in one or more of the registration states. The majority of the registration states require that a franchisor be registered prior to offering or selling franchises in the state.
Trademarks, Service Marks & Copyrights
As part of the document development process, we advise you concerning trademarks, service marks and copyrights that your company may license to franchisees. If required, we assist in filing copyright and trademark registrations on your behalf.
Reporting Requirements and Performance Standards
Franchisees are typically required to provide information to the franchisor regarding sales, financial data, income and sales tax returns, and other information specified by the franchisor. We advise you concerning appropriate reporting requirements relative to the franchise business and your operation. In addition, we provide recommendations regarding minimum performance standards, revenues and/or inventory purchasing requirements when appropriate. When performance standards and/or inventory purchasing requirements are implemented, they are included in the Disclosure Document in compliance with the FTC franchise rule.
Exclusive Territories
Franchisors may grant franchisees an Exclusive Protected Trade Territory in which to operate the franchise. Our franchise consultants advise you concerning the criteria and system to be used to establish exclusive territories. The FDD and Franchise Agreement outline the territory criteria and identify the franchisee’s rights to the territory.
Site Requirements and Specifications
Franchisors may choose to offer assistance to franchisees relative to selecting a site for the franchise business. Franchisors have the right to dictate the type, style, size and other criteria specific to the franchise location. We consult with you to establish appropriate requirements and criteria for the site selection process. As part of this process, we produce a Site Evaluation Form to be completed by franchisees. If the franchise business is home-based, we assist in determining specifications and requirements for a home office.
Franchise Support Services
We consult with you concerning the types of support services that should be provided to franchisees during the pre-opening period and once their franchise is operational. We also advise you concerning additional support services that may be required as the franchise grows. This ensures that proper disclosures are made while permitting you to make modifications to the types and amounts of support provided to franchisees as changes to the system are made.
Area Developer Agreement
An Area Developer program permits a franchise company to sell multiple franchises to a single franchisee for development over a prescribed time period. A percentage of the franchise fee for each franchise to be opened is typically paid in the form of a development fee upon execution of the Area Development Agreement. As part of the preparation of the disclosure document, we advise you concerning the structure and requirements for the Area Developer program. Our franchise consultants prepare the Area Development Agreement as an exhibit to the Disclosure Document. This ensures that disclosure requirements are met and multiple-unit opportunities are immediately available.
Master Franchise Agreement
We advise you concerning the appropriate structure, requirements, and policies for implementing a master franchise program. One form of a master franchise program permits the company to grant a franchisee the right to act in a sub-franchisor capacity within a master development territory. The master franchisee (or sub-franchisor) is granted the right to open and operate individual franchises, as well as offer other individuals the right to operate franchises within the territory. The master franchisee may be responsible for qualifying, selling, training, and supporting the franchises within their territory to all or some extent. A master franchise fee is typically charged based on a number of variables. Franchise fees and royalties generated from sub-franchises within the territory may be shared by the franchisor and the master franchisee. Our franchise lawyers prepare the master franchise agreement and sub-franchise agreement as exhibits to the Disclosure Document or within a separate Disclosure Document, depending on the client’s preference. Please contact us for additional information.
The Consultation is Free!
Click here today to discuss how we can provide you real savings while producing far better results!
Cost Effective Franchise Development
Business Development Centers
5514 Metro Parkway
Sterling Heights, MI 48310
586-303-0040 Voice
586-314-0516 Fax
Business Development Centers
5514 Metro Parkway
Sterling Heights, MI 48310
586-303-0040 Voice
586-314-0516 Fax
