From traditional business marketing agencies to sign spinners, advertising franchises are popular choices for individuals seeking turn-key business opportunities with in-demand service offerings and relatively low barriers to entry. While some advertising franchises may require a brick-and-mortar location, many are home-based business opportunities that offer flexibility and a modest initial investment along with the freedom of being your own boss.
Of course, like all franchise opportunities, advertising franchises come with certain risks. While negotiating your franchise agreement and understanding the impact of state franchise laws can mitigate these risks to a certain extent, many of the risks involved in buying a franchise are simply unavoidable. You are investing in a business that, while independently owned and operated, ultimately relies on the efforts and decisions of your franchisor. You are also signing a long-term contract with little (if any) room for error, and which may include a requirement to pay your franchisor even if your business is unsuccessful.
Key Legal Considerations with Advertising Franchises
On top of the franchise-specific legal issues, advertising is a regulated industry which has the potential to run into legal issues in other areas as well. As a franchisee in the advertising industry, some of the key legal considerations you will likely run into as you operate your business include:
- Territorial Restrictions – What does your franchise agreement say about your territory? Is it exclusive? Or, will you be in competition with other franchisees?
- Renewal, Transfer and Termination – What are your rights regarding renewal and transfer of your franchise? It is important to keep these in mind from day one, since franchise agreements will often include a variety of provisions that severely restrict franchisees’ ability to renew or sell their businesses. Termination rights (both yours and the franchisors) should be clearly understood as well.
- Royalties and Marketing Fees – How are your royalty and marketing fees structured? As a percentage of gross revenue, or a flat monthly fee? Do you have to pay even if you are unable to turn a profit?
- Franchisor Support – What obligations, if any, does the franchisor have to provide support for your business? After the initial training program, many franchisees find that they are left simply on their own.
- Regulatory Issues – Advertising agencies will often be forced to contend with a number of regulatory requirements, and these can vary from state to state or even from one municipality to another.
- Client Relationships – Do you own your client list, or does your franchisor? Do you have contracts to use with your clients that provide appropriate liability protection in the event of a dispute?
- Intellectual Property Rights – Do you know when you can use competing brands in advertising materials? Are you familiar with the laws that govern use of photos and content you find online? Advertisers can often run into trouble – with clients, third parties and their franchisors – when they fail to obtain necessary licenses and infringe on third-party intellectual property rights.
Advertising Franchise Opportunities
A random perusal of advertising franchises identified online brings up the following:
- Alphagraphics – A print and visual communications franchise with more than 300 outlets nationwide.
- EmbroidMe – A B2B advertising franchise with more than 350 outlets nationwide.
- FastSigns – A sign printing franchise that has been ranked #1 by Entrepreneur Magazine’s Franchise 500.
- Minuteman Press – An advertising franchise serving small businesses and large corporations across the country.
- Proforma – A national advertising franchise opportunity that has been ranked as a top franchise by Franchise Business Review.
Advertising franchises can be successful, but finding success often requires careful pre-planning, thorough due diligence, and a commitment to thriving within the franchise model. If you have questions or would like help understanding the terms of your Franchise Disclosure Document (FDD) or franchise agreement, contact the Goldstein Law Firm today.
Contact the Goldstein Law Firm
The Goldstein Law Firm is a national franchise law firm that exclusively represents franchisees and dealers. If you would like to speak with franchise attorney Jeffrey M. Goldstein about your advertising franchise opportunity, call (202) 293-3947 or request a free consultation online today.
Disclaimer: The identification of any franchise or company on this website is not an endorsement of any aspect of that entity in any regard, nor should it be taken as one.