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Tips for Staying Compliant with Your Franchise

The relationship between franchisors and franchisees can be a smooth and effective one if both sides fulfill their obligations. This requires certain sacrifices and compromise on both sides, as the franchise structure is a unique way of doing business. Our firm will give franchisees and franchisors three tips each for keeping relations pleasant and mutually beneficial.

For Franchisees

  1. Stay true to your franchisor’s trademarks and service marks. For any reputable company, its brand is everything. Franchisors spend a considerable amount of money to keep up its various intellectual property and go after any bad actors attempting to infringe or dilute its registered marks. Displaying outdated uniforms, signage, equipment, products, or services is one way you can run afoul of your franchise agreement.
  2. Submit complete reports on time. Franchisees have to pay their franchisors different fees, such as licensing fees and royalties. Royalties are often a percentage of profits or gross sales within a certain time period. Franchisees must usually submit weekly, monthly, and annual reports (if not more). The information contained in these reports give franchisors a good idea about needs for improvement.
  3. Be engaged with your franchisor and within the wider network. It is common for franchisors to have annual conferences, retreats, and other meet-ups for franchisees. Your franchisor will clearly delineate which events are mandatory and which are optional. Clear your calendar so you can attend required events, and do your best to attend other, non-required meetings. You can get a lot out of meet-ups, including other perspectives and methods from other franchisees that you can try to implement at your location.

For Franchisors

  1. File a Franchise Exemption Notice with the Florida Department of Agriculture & Consumer Services. The state of Florida has relatively few laws that place requirements on franchisors. One annual requirement for Florida franchisors is to file an exemption that affirms their compliance with the Federal Franchise Rule; specifically, it claims that you filed all franchise disclosure documents (FDD) in accordance with the Federal Rule.
  2. The FDDs you send to prospective franchisees must contain all the information required by the Federal Rule. The purpose of the FDD is to give interested parties all the information they need in order to make an informed decision on franchising. The Federal Trade Commission oversees and enforces the Federal Franchise Rule. Within the FDD, there are 23 specific pieces of information that must be conveyed.
  3. Provide incentives for your franchisees’ compliance. Monetary incentives are always effective at motivating franchisees to fulfill certain actions. Another effective way to recognize exceptional franchisees is by handing out awards at annual conferences.

We Can Help You

Trembly Law Firm is 100 percent committed to the success of Miami’s small business community. If you need any legal services to help your franchise survive and thrive, please reach out to our firm by calling us at 305-431-5678 to get started with a virtual consultation.

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