Franchises are facilitated by Franchise Agreements, in tandem with other business and general contracts that are collectively known as enterprise law. Whether you are a prospective or current franchisor or franchisee, legal counsel is helpful when drafting your Franchise Agreements or renewing them (which occurs annually in Minnesota). Legal counsel can help you negotiate terms of the Franchise Agreement and protect your interests.
Minnesota is a state that has very strict franchise law that protects franchisees. The Minnesota Franchise Act protects franchisees from unfair practices and allows them to hold franchisors accountable via lawsuit. Generally speaking, franchisors are responsible for upholding a brand, coordinating high-level functions and supply chain operations, and providing license to intellectual property. Franchisees must carry out the trademarked services and use unified brand elements, all while making revenue and paying a franchise fee. Franchisors also generally cannot terminate, fail to renew, or withhold consent to transfer the franchise without giving 90 days notice and good cause.
Franchise Agreement Elements
When you are part of a franchise, you must prepare franchise disclosure documents, which must conform to standards set in the Amended Franchise Rule, which is governed by the Federal Trade Commission. This rule states what additional information may or may not be included and what records must be maintained by franchisors. The complexity of the drafting of these agreements is why a Minnesota franchise and enterprise law attorney is needed for both franchisors and franchisees alike. Below is a short list of the sections that may be included in records and a Franchise Agreement:
- Estimated initial investment
- Restrictions on sources of services and products
- Franchisee obligations
- Financing details
- Initial fees and other fees
- Litigation plans and contingencies
- Franchisor’s assistance, computer systems, advertising, and training
- Outlined territories
- Use of trademarks, patents, copyrights, and proprietary information
- Obligation to participate in franchise operation
- Restrictions on what may be sold
- Renewal, transfer, termination, and dispute resolution
- Financial performance expectations
- Outlets and franchisee information
- Financial statements
- Contracts for franchise assets
- Receipts management
These are just some of the sections that may be included in the agreement.
Contact a Minnesota Franchise And Enterprise Law Attorney
If you need to establish a Franchise Agreement or you need any other help with your own franchise to ensure its sound operation, Vlodaver Law Offices, LLC. can help you, as it has helped multiple clients, franchisors and franchisees alike. Contact us for a free consultation.