Starting a franchise in Florida is a great way to enter the business world. You receive the franchisor’s business assistance and expertise alongside brand recognition, buying power, a built-in customer base, and minimized risks.
But a franchise comes with unique obstacles. Learn more about the basic requirements for opening a franchise and common legal issues.
Undertaking the franchise agreement
The agreement between the franchisee and the franchising company (franchisor) is the foundation of the partnership. It delineates your responsibilities and rights as a franchisee and outlines the benefits you can expect to receive.
Ensure that you have a thorough understanding of this document before committing. The agreement breaks down:
- Fees and royalties
- Operational timeline and benchmarks
- Operating territory
- Contract duration and renewal options
- Support and training
Burden of responsibility
New franchise owners must understand their burden of responsibility regarding certain actions. If an employee makes an error, for example, the ultimate responsibility for the mistake must be clear between the franchisee and the franchisor. If the burden of responsibility is unclear, complicated legal issues may ensue, particularly if the matter was not addressed at the time of signing.
Licensing and permits
Franchisees can be required to adhere to local, state, federal, and regional laws to start a franchise. Depending on the industry, necessary licenses and permits can vary. A common example is a restaurant that serves alcohol. The required liquor license is expensive and must be renewed regularly. Failure to adhere to the outlined regulations of the industry of the franchise can result in penalties and even permanent closure.
Florida franchising laws
The Sunshine State is a rare region where state franchise registration is not necessary. Florida also doesn’t require a franchise disclosure document or FDD. However, the state does have laws that prevent franchisors from intentionally misrepresenting themselves to franchisees. The companies are also prohibited from withholding certain information concerning the sale or agreement.
Insufficient support
Many new franchise owners are dependent on the franchisor to help them with their progress. That’s not an unreasonable assumption. Unfortunately, issues occur when the franchisor fails to provide the support newcomers need. For this reason, it is essential that any prospective franchisee understands the agreement and what to expect from this partnership with a franchisor. If the agreement includes corporate support, the franchisor is legally liable to provide adequate assistance.