Legal Question in Business Law in Missouri
There are three of us looking to open a consignment franchise (in fact we are purcashing, two territories). We want to open a bank account that we fund our franchise(s) from our intial investments. However, the bank is stating we need: articles, tax id, and poss an operating agreement. We really want all transactions to feed from this bus. acct, not our personal.
It's my understanding that we will get our business license and "operating" paperwork upon purchase.
So how come the cart seems to come before the horse? We won't get paperwork till we pay, but we can't pay till we get the paperwork. Am I missing something here? and what is the correct order paperwork should be done?
1 Answer from Attorneys
Any franchise attorney will say banks all have a protocol they follow. If you want to open an account and have a corporation, for example, they want to see your articles of incorporation, tax i.d. number, etc. Also, when you buy a franchise, normally a separate transaction, known as franchise assignment or transfer, takes place when you assign the franchise to the entity. If you haven't signed the franchise agreement yet, don't before getting a due diligence review by a franchise attorney. Consult with a good franchise attorney for specific advice.
Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise
Franchise Attorney
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