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Before You Buy a Franchise

What to Consider Before Buying a Franchise (PDF)

Franchising Basics
This is an online course for soon to be franchise owners, franchise company employees, franchisees and consultants. Sponsored by the International Franchise Association (IFA), it offers a comprehensive introduction into franchising for individuals considering purchasing a franchise. This course covers a wide variety of topics including franchising laws & regulations and the advantages and disadvantages of franchising.
http://www.franchise.org/

Franchise Sales Compliance
Another online course offered by the International Franchise Association. It is primarily for individuals involved in the franchise sales and distribution process such as: franchise executives, managers, compliance officers, attorneys, paralegals, franchise brokers and consultants. Some of the topics covered are franchise disclosure laws, disclosure requirements, and franchise registration process.
http://www.franchise.org/

Legal Representation

The best advocate for you, in a franchise dispute, is a franchise attorney. As franchising is a highly specialized field, you should hire an attorney with experience representing franchisors or franchisees.

Hiring an attorney should not be done without research. Visit www.findlegalhelp.org a site sponsored by the American Bar Association, to learn about referral services and issues you should raise when consulting with a lawyer. Do not feel restrained from hiring a lawyer whose offices are out-of-state, provided he or she is licensed to practice law in New York or will retain local counsel to litigate in New York. Another source for examining an attorney's credentials is http://www.lawyers.com/. The franchise associations below may also provide referrals to experienced franchise attorneys.

Alternative Dispute Resolution

Litigation usually signals the end of a business relationship, but the franchise community has increasingly sought the use of mediation to solve franchise disputes. Franchisees who do not want to resort to litigation and believe they can still work with their franchisors should consider Alternative Dispute Resolution (ADR). While ADR is less expensive than litigation, franchisees should understand that the result of ADR is a mutually agreed upon resolution, not a finding of fact by a judge, and therefore is not legally binding on either party.

The National Franchise Mediation Project (NFMP) specializes in franchise mediation. The mediators are experienced in handling franchising disputes. If your franchisor is a member of the NFMP then they have agreed to mediate a dispute if the franchisee wishes to mediate.
www.cpradr.org

International Franchise Association's (IFA) Ombudsman Program

This organization has an ombudsman who provides confidential listing, consulting and facilitating services to assist in resolving disputes. The initial call is free to all IFA members and their franchisees.
www.ifaresolve.com

Useful Links

American Association of Franchisees & Dealers (AAF&D;)
A national non-profit trade association representing the rights of franchisees throughout the U.S. whose mission is to bring fairness to franchising.
http://www.aafd.org

American Franchise Association (AFA)
A representative organization for franchisees which advocates changing the rules and laws governing franchising on both the state and national levels.
http://www.franchise.org

Asian American Hotel Owners Association (AAHOA)
Provides ongoing professional education, about the hospitality industry, to its members so that they may become better managers and more successful business people.
http://www.aahoa.com

Businesslaw.gov
Site is designed to help small businesses navigate and understand applicable federal and state rules and regulations.
http://www.businesslaw.gov

Federal Trade Commission (FTC)
Complaint hotline telephone number (877) 382-4357.
This organization regulates franchises on a federal level.
http://www.ftc.gov/bcp/franchise/netfran.htm

International Franchise Association (IFA)
This organization seeks to put franchisors, fanchisees, and suppliers under one umbrella to facilitate effective business transactions among those member groups.
http://www.franchise.org

New York State Bar Association (NYSBA) Franchise Law Committee
This committee was formed to provide a forum for those attorneys who actively practiced franchise laws and those who are interested in such laws. It seek to inform the general public to the fact that there is a large number of knowledgeable attorneys within the State who practice in this field. This site contains many interesting articles on franchising written by committee members.
http://www.nysba.org

North American Securities Administrators Association, Inc. (NASAA)
This site contains a directory of how to contact your State's franchise regulators.
http://www.nasaa.org

Service Corps of Retired Executives (SCORE)
The SCORE Association (Service Corps of Retired Executives) is a nonprofit organization dedicated to entrepreneur education and the formation, growth and success of small business nationwide. Working and retired executives and business owners donate their time and expertise as volunteer business counselors and provide confidential counseling and mentoring free of charge.
http://www.score.org

State of California
California's Franchise Web page
http://www.corp.ca.gov/srd/franchise.htm
California's Electronic Access To Franchise Filings http://134.186.208.228/caleasi/pub/Exsearch.htm

State of Illinois
Illinois's Franchise Web page
http://www.ag.state.il.us/consumers/franchise.html

State of Maryland
Maryland's Securities Web page containing links to Franchising Resources
http://www.oag.state.md.us/Securities/index.htm

State of Virginia
Virgnia's State Corporation Commission Franchising Web page
http://www.state.va.us/scc/division/srf/index.htm

U.S. Business Advisor
This site provides a variety of information, including:

  • Starting, managing and marketing your business. Includes links to American Express Small Business Network, Forbes Small Business Center and Fortune Small Business magazine.
  • Business tax concerns. Includes information on self-employment concerns, direct access to tax law and American Bar Association Tax Section publications.
  • Financing your business. Includes information on Small Business Administration loan programs, Department of Agriculture loan programs and Kiplinger small business finance.
  • Workplace regulations. Includes information on Equal Employment, Americans with Disabilities Act, employee benefits and pensions.
http://www.business.gov

U.S. Small Business Administration (SBA)
This official site site of the SBA is a trove of information how to start, mange, finance and sell a business. They also can be reached at the Small Business Answer Desk at 800-U ASK SBA. Use this site to find out how to:

  • Write a business plan.
  • Obtain needed licenses.
  • Obtain SBA loans,from $2,000 to $2 million and beyond.
  • Receive disaster relief.
  • Link to hundreds of on-line resources.
http://www.sba.gov

 
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