While building a franchise system used to be a long-term endeavor, it is becoming increasingly common for companies to establish franchise systems in order to sell out and move on. We have seen several reports of franchisors selling relatively “young” systems in recent years; and while franchisor founders may say that their decisions are driven by doing what is best for their franchisees, the reality is that selling out offers both a substantial payday and the ability to avoid ongoing risk related to the operation and management of the franchise system.
Author: Goldstein Law Firm
Illinois is one of relatively few U.S. states that have adopted both a franchise disclosure law and a franchise relationship law. These laws provide statutory protections to prospective and current franchisees; and, when franchisors violate these laws, franchisees have certain rights even if these rights are not spelled out in their franchise agreements.
If you have been exploring franchise opportunities, you have likely discovered that all franchisors have a Franchise Disclosure Document (FDD) that looks fairly similar. But do you know why this is the case? It isn’t because franchisors want to make disclosures or simply copy their competitors, but rather because the FDD is required under a set of federal regulations commonly known as the “FTC Franchise Rule.”
When buying a franchise, comparing competing franchise opportunities is an important part of the due diligence process. Too often, prospective franchisees choose a brand they want to pursue, and then they pursue it without gaining an understanding of whether there are better opportunities available.
According to the International Franchise Association (IFA), Illinois is the fastest-growing state in franchising. The IFA’s recent 2023 Franchising Economic Outlook highlights the 10 fastest-growing states in terms of franchise establishments, franchise employment and franchise output—and Illinois tops the list in all three categories.
The International Franchise Association (IFA) recently released its 2023 Franchising Economic Outlook. Developed in partnership with FRANData, the Franchising Economic Outlook is the IFA’s “annual study . . . detailing the franchise sector’s performance for the past year and projected economic outlook for the year ahead, as well as an in-depth state outlook for all 50 states and Washington, D.C.”
As a franchisee, there may come a time when you want to sue your franchisor. This can happen for a variety of reasons, and it can happen at virtually all stages of the franchise relationship. But, should you sue—and can you? Answering these questions requires the advice and representation of an experienced franchise attorney.
Just like owning any other type of business, owning a franchise entails a variety of risks. When buying a franchise, understanding these risks is important. Effective risk management is critical to franchisees’ success, and prospective franchisees must work with an experienced franchise lawyer to ensure that they are making informed decisions with their long-term interests in mind.
Boston has become a hub of the franchising world in recent years. Both new and well-established franchisors are targeting growth in the area, although quick-service restaurants (QSRs) are not as popular here as they are in many other major U.S. cities.
If you are thinking about buying a franchise, you are probably familiar with the main costs involved. You will need to pay an initial franchise fee when you sign the franchise agreement, and you will need to pay monthly (or weekly) royalties and advertising fees based on your gross revenue. But are there “hidden” costs you should be aware of as well?