Michigan

The Basics of Offering a Franchise in Michigan

Franchising can provide a business owner with a way to dramatically expand his or her business operations, and generate significant revenues by leveraging the efforts of the franchisees who buy into the system.

There are many legal issues that must be addressed when offering the franchise. These issues demand that the franchisor's legal counsel be familiar with various areas of law such as state and federal franchise law, contract law, antitrust law, intellectual property law, and even bankruptcy law.

The basics of offering a franchise involve the following:

1. Forming the business entity that will offer the franchises, which generally should be a separate holding company.

2. Obtaining the necessary registrations for franchise trademarks.

3. Preparing the franchise agreement.

4. Preparing the franchise disclosure document, which contains certain prescribed information for potential franchisees.

Once these steps are completed, the appropriate government registrations must be obtained in order to offer a franchise for sale. In Michigan, a notice that the franchisor is going to be offering franchises for sale in Michigan must be filed with the Michigan Attorney General, along with a required $250 fee. This notice must be renewed annually. Other states, such as Illinois and Maryland, require that copies of the franchise disclosure document actually be filed and approved by those states' franchise regulatory officials before franchises can be offered for sale and on an annual basis thereafter.

Once state approval has been obtained to offer franchises for sale, the process of expanding a business through franchise system can begin. It is vital that any business that is considering expansion through franchising in Michigan consult with a Michigan franchise lawyer to make sure all of the required steps are followed.

Full post as published by Michigan Business Lawyer Blog on September 24, 2008 (boomark / email).