Franchise Law and its Concepts
Franchise laws are all about the legal relationship between a franchisee, a person willing to sell the product of a company or franchisor.
The franchise laws bring about different areas of the law regarding such particular relationship as well as the relationship of the franchisee to its employees and other third party elements.
In a franchise system, a person may buy the right to sell a product of a licensed company or franchisor. But unlike normal resale systems, a franchisee sells the products or services of the franchisor under the franchisor’s trademark, trade name or brand name. Franchise law is the body of law created for the regulation of relationships between the franchisee and the franchisor.
Federal statutes or the FTC or Federal Trade Commission regulates franchise laws. Each region may implement their own laws and regulations regarding the legal relationship between franchisor and franchisee in their respective areas. The tort system can also apply ruling and decisions that directly affect the franchising system. Since there are various regional or state laws, franchise law interpretation can be varied from one state to another or even one country from another. A franchise contract can be legal in one state but it may be illegal in another.
Franchise law is very distinct due to the unique relationship of franchisor and franchisee. Even though it has evolved and practiced in every states, it still has to adhere to other legal specialty areas. Other legal areas that are related to franchise law are the business law, contract law, trademark law, collections law, international law, employment law, administrative law and customs.
It is important to heed the legal advice of a franchise lawyer before proceeding into the franchising business. Franchise law luminaries should always be present during negotiations with franchisers so one can be legally advised and fully protected by the law. It is better to get a lawyer specializing in this particular branch than an ordinary lawyer who has to catch up in recent franchise legislation.