Legal Question in Business Law in California

Re: Requirements To Franchise A Business

There are very strict specifications regarding franchising a business, with those requirements being different with each state. It is not something you should attempt yourself. You need to find a good franchise attorney.

Re: Requirements To Franchise A Business

Franchising businesses are defined and regulated under the laws of each state. In California and many others, the requirements include a sort of legitimacy test that allows the regulators to assess whether the proposed franchise arrangements are fair to the franchisee.

I'm away from my office as I write. When I return, I'll give you a more complete response after consulting my references.

Re: Requirements To Franchise A Business

Thank you for your inquiry. Franchising is a relatively difficult task to undertake. As such, counsel is often retained to represent businesses in these matters. Our firm assists franchisors in establishing businesses in the US. Please feel free to contact me directly so I may answer your inquiry in-depth. I may be reached at 619.233.0900.

Sincerely,

Re: Requirements To Franchise A Business

The legal requirements to franchise a business in California are to prepare and register a Franchise Offering Circular with the California Department of Corporations. This must be done before any advertising for franchises takes place. Once the circular is registered, it must be given to prospective buyers for at least 10 business days before contracts are signed or any money changes hands. Any advertising circulated in California must be filed with the Department before use.

There are no minimum net worth or asset requirements, although audited financial statements are attached to the offering circular. If a state agency believes the franchise entity lacks adequate financial resources to satisfy its contractual obligations, it will impose impound, bonding or other conditions.

Once you move beyond California, there are 13 other states that have registration requirements similar to California. Two additional states have a relatively simple franchise filing requirement. Then, depending on a number of variables, you may have to comply with state-specific business opportunity registration laws. There are about 24 states that regulate these. Also, the Federal Trade Commission has a franchise rule that applies in all states, and sets minimum federal standards.

Beyond the immediate legal issues, there are significant business considerations. There are a number of articles posted at our website that address both topics.

This posting is not, nor is it intended to be, legal advice or the formation of an attorney-client relationship. You should consult an attorney for individual advice regarding the particulars of your situation.

Mr. Franchise

Re: Requirements To Franchise A Business

As all other attorneys said...each state has its own regulations. Among many...you have to get your UFOC (Uniform Franchise Offer Circular)register with sceretary of state. Take a look at ss.ca.gov and also my website at www.attorneyadvise.com