Franchisor Lawyer

A franchisor lawyer helps business owners build, register, and operate a franchise system legally. That includes drafting the Franchise Disclosure Document, registering in state registration jurisdictions, structuring franchise and development agreements, and protecting intellectual property. At EntrePartner, we go beyond preparing legal documents. We act as a strategic advisor to help you structure your franchise program, protect your brand, manage compliance, and make practical decisions as your system grows.

Well before you sell your first franchise. The FDD must be completed and registered in applicable states before you can legally offer or sell a franchise. Most founders also benefit from working with a franchisor lawyer during the feasibility stage, to make sure their business model is actually ready to scale through franchising.

The timeline depends on your business complexity and how quickly you can provide the information needed to draft your FDD. Many first-time franchisors should expect the initial legal build-out to take several months, with additional time for state registrations where required.

No. The FTC's Franchise Rule requires a compliant FDD, but not every state requires registration before you can offer or sell franchises there. For each potential buyer of your franchise, you need to ensure you are meeting federal law as well as any applicable state laws, which usually depend on where the buyer resides and plans to operate the franchise. Some states require registration before offers or sales, some require notice filings or exemptions, and others are primarily disclosure-only jurisdictions. We help map your target markets and determine what filings, registrations, or exemptions are needed before you begin franchise sales activity.

The Franchise Disclosure Document is a federally mandated document that gives prospective franchisees detailed information about your system before you offer a franchise to them. It covers your business history, fees, obligations, litigation history, financial performance, and the full terms of the franchise relationship. A well-drafted FDD protects you legally and presents your system professionally to the franchisees you actually want to attract. When all is said and done, the FDD with all its exhibits typically runs 150 to 300 pages or more.

One of the required exhibits to the FDD is a set of financial statements. The general rule is that the franchisor entity must include its last three years of audited financial statements. Because new franchisors usually form a new corporate entity to sell franchises, new franchisors often will not have three years of statements and will include only those statements since the formation of the entity. Additionally, under the federal and most state franchise laws, there is an exemption from the requirement that statements be audited during the first full or partial fiscal year of franchising. A handful of states, however, have heightened requirements for the first year, such as an audited opening balance sheet. So whether you will need audited financial statements will depend on which states you wish to be registered in to sell franchises.

We are often asked if it is possible to avoid the need for a franchise system — and thereby avoid the need to create an FDD and comply with all the federal and state franchise laws — by simply "licensing" a business idea rather than franchising it. The short answer is that it is very difficult, and in many scenarios nearly impossible, to structure a legal licensing relationship that allows a third party to operate a business under your name and systems that does not fall under the franchise laws and regulations. If this were a more viable option, most businesses would opt to license their business to avoid the more onerous franchise regulations; for that very reason, however, the legal regulations capture almost all such relationships other than true product licenses. A limited number of exemptions from the franchise disclosure and registration requirements are available, and we can help you explore those if they make sense for your situation.