Business and Tax Lawyer Blog

In May, Sports Clips reached a billion dollars in haircuts. While only franchising for 16 years, Sports Clips is the number one hair care provider for men’s and boy’s haircuts. With over 780 stores in 38 states, Sports Clips continues to grow with 120 new stores projected to open this year. By focusing on a niche market, Sports Clips has been able to create and refine the haircut experience. In recent years, Sports Clips has ranked in the top 10 in Forbes’ Top 20 Franchises to Start and in the top 50 “fastest growing” franchises in Entrepreneur Magazine’s Franchise 500.

One unique business practice which has lead to Sports Clips' success is its use of non-exclusive licensing agreements. Through careful use and implementation of non-exclusive licensing deals, Sports Clips has partnered with organizations such as the NBA, MLB and NHL. Often times, these organizations are seen as having competing business interests and often employ the use of exclusive licensing arrangements. Non-exclusive license agreements typically have less restrictive terms binding one or both of the parties. However, in exchange, these agreements are usually much less profitable for one or both of the parties than an exclusive licensing deal.

To learn more about this article, visit Sport Clips Reaches "Billion Dollars" in Haircuts.

Continue reading "Sports Clips-A Growing Franchise" »

There's a new trend hitting the "fast food" world. Insiders are referring to it as the "better burger" concept, and one up-and-comer, known as "Smashburger", has set its sights on Jacksonville. Smashburger recently announced its agreement with five new franchisees who have commitment to build 63 new franchise units across the country. This news brings Smashburger's franchise pipeline total to about 463 locations.
Jim Crossen, and his American Food Services Group, LLC represents one of the five new franchisees. In the announcement, Crossen is said to have committed to open seven restaurants in the Jacksonville-Duval County area over the next four years.

To read more on this article, visit Smashburger Finds FIve New Franchisees.

Continue reading "Smashburger Attracts Five New Franchisees" »

Forbes magazine has ranked the "take and bake" pizza franchise Papa Murphy’s International 5th on its list of top 20 U.S. franchises.
To make the list, Forbes took into consideration four variables: estimated minimum start-up investment, total number of locations, attrition rates, and the total amount of training offered to new franchisees measured against the start-up cost.

Papa Murphy’s unique business model offers custom pizzas with a focus on high quality ingredients that customers take home and bake themselves. The franchise was also voted #1 Rated Pizza Chain by Zagat Survey in 2010.

If you are thinking about purchasing a franchise, the Papa Murphy's "model" for success may provide some insight. There is a multitude of things to consider when evaluating whether to invest in a franchise. Such as how the franchisor supports their local operations with business support and product branding.

To learn more about this article, visit Papa Murphy's Pizza Makes Forbes List of Top 20 Brand-Name U.S. Franchises.

Continue reading "Papa Murphy’s makes Forbes List of Top 20 Brand-Name U.S. Franchises " »

Wells Fargo acquired Wachovia back in 2008 during the peak of the financial meltdown. Since that time, consumers and analysts alike have wondered when Wachovia would actually transition and take on Wells Fargo's name.
All of Wachovia's signage and systems for North and Central Florida, as well as Greater Tampa, are set to change over to the Wells Fargo brand by the end of June. The rest of Florida is set to complete its conversion by the end of July.
Following the merger, Wells Fargo became one of the largest banks in the world, and the third largest in Florida. It also operates over 9,000 commercial branches and 12,000 ATM's nationwide.

Continue reading "Wachovia Set to Convert Name to Wells Fargo" »

According to Technomic Inc.’s annual report on top U.S. restaurant chains, Firehouse Subs was the eighth fastest growing restaurant chain in the United States in 2010. Firehouse reported sales of $235 million in 2010, which was a 14% increase over the previous year. This is only the latest accolade for the Jacksonville-based submarine sandwich company, which has been experiencing an uphill projectory stimulated by franchise growth.

Technomic measured restaurant chains with $200 million or more in annual sales. The 500 largest chains grew by an average of 1.8%. The top 10 overall restaurant chains are Five Guys Burgers and Fries, Jimmy John’s Gourmet Sandwich Shop, Chipotle Mexican Grill, BJ’s Restaurant & Brewhouse, Yard House, Cheddar’s Casual Café, Buffalo Wild Wings Grill & Bar, Firehouse Subs, Noodles & Co., and Panda Express. All of the top ten restaurant chains have a percentage increase of 1.8% or higher.

To read more on this article, visit Firehouse 8th fastest growing chain.

Continue reading "Firehouse is the 8th Fastest Growing Restaurant Chain " »

When deciding on whether or not to invest in a franchise, it is important to make a thorough evaluation of the franchise. The top three things to consider when evaluating a franchise are hidden costs, markets and marketing, and finances. The main mistake most people make when evaluating a franchise is to not considering all the costs associated with starting the franchise. Also, most forget to figure in the startup lag that may be from a few months to a year. When sitting down to evaluate a franchise, make sure to pay attention to the business plan for marketing costs and the breakdown of competition. Also, do not forget to take a look at the franchisor’s financial history. While it is important to know the future finances, it is also important to know the growth patterns and evaluate how the franchisor makes its money.

As the old saying goes, “knowledge is power.” Make sure to take the time and thoroughly evaluate a franchise before making a big investment.

Another matter to consider when starting a business, such as purchasing a franchise, is how you should set up your ownership structure. To read more on this article, visit How to Choose the Right Ownership Structure.

Continue reading "What are the Top 3 Tips for Evaluating a Franchise? " »

Today, Warner Brothers Digital Distribution announced that Facebook users will soon be able to stream "The Dark Knight" through the studio's Facebook page. Further, the studio announced its intent to make many other movies available through Facebook streaming over the coming months.

Viewers (i.e., Facebook members) will be able to view WB titles for a cost of $3, which will only be available for 48 hours. The $3 cost is apparently equal to 30 Facebook credits, sales from which Facebook takes a 30% cut.

This move could potentially put Facebook in direct competition with companies such as Hulu and Netflix. Despite Facebook's massive user base, Netflix seems well positioned to face any challenges. Last January, Netflix reported 63% annual growth, and claims to have 6% of the U.S. population as subscribers.

Continue reading "Can Facebook Compete with Netflix and Hulu?" »

Started by Doctor's Associates, Inc. in 1966, Subway restaurants has officially surpassed McDonald's as the world's largest fast food chain. As of the end of 2010's fiscal year, McDonald's had 32,737 active locations, compared to Subway's 33,749 franchises.

To add a local perspective, Jacksonville is home to 35 McDonald's restaurants, while Subway operates 50 locations throughout the Jacksonville-Duval county area.

Continue reading "Subway Crowned New King of Fast Food Chains" »

Local eatery, The Times Grill, has been acquired by another local business.
Recently, Times Grill owner, Kelly Harris, made the difficult decision to close all of its Jacksonville locations. However, there is an upside, as those locations are being re-branded as Original Bubba Burgers Grills.

Jacksonville-based Bubba Burgers is known for producing frozen beef patties, typically sold in retail grocery stores. With its acquisition of the Times Grill, Bubba plans to re-open the restaurants under a new casual dining-fast food business model.

Under this new business model, there will be no waiters or waitresses. Instead, diners will select and customize their own hamburgers. If successful, Bubba Burgers hopes to expand the concept nationally, including airports, stadiums and college campuses.

To read more on this article, visit Times Grill to Re-Open.

Continue reading "Jacksonville's Times Grill Re-Opens with a New Name and New Business Model" »

As with any other high-ticket expenditure, considering purchasing a franchise can be a tough decision. There are a number of things to keep in mind in order to avoid surprise.

Franchisees have limited power. There is a misconception that purchasing a franchise is like becoming a partner in the business. This is untrue. Though a franchisee may own the store or restaurant as well as the operations at that location, the franchisor establishes company policy and sets standards for quality control. For example a Burger King franchisee who disagrees with a new pricing structure may suggest alternatives, but is in no position to alter the policy.

Franchisees and franchisors do not necessarily have the same goals. While the franchisee's primary purpose is to meet the needs of consumers, the franchisor's main goal is to recruit more franchisees. Both sides share the common purpose of building the brand, though through different approaches. In this case, the franchisor ensures each franchisee understands the value of the product or service. Also, the franchisor ensures strict compliance with quality control standards. In return, franchisees ensure employees at each location understand their role in the business. Franchisees may also educate the franchisor. Because franchisees interact directly with consumers they are in a position to update the franchisor regarding whether services or products are meeting consumer expectations.

Franchisees have multiple safeguards. The franchisee franchisor relationship is protected by the Federal Trade Commission (FTC). The FTC requires franchisors to follow certain procedural guidelines when limiting a franchisee's earnings. Further protection is provided in the Uniform Franchise Offering Circular (UFOC). The UFOC defines the duties of each party.

The rewards of owning a business are immeasurable.  To learn more about the specifics involved in purchasing a franchise, contact an attorney to arrange a consultation.

Continue reading "Is a Franchise Right for You?" »

The entry fee for a lifetime membership in the Freedom Boat Club Franchise is $5000. Unfortunately, Jacksonville, Florida residents who paid the membership fee may be out of luck. Last August, Freedom Franchise Sales terminated its contracts with two Jacksonville Florida Boat Club locations; one at Intracoastal Waterway and the other at Julington Creek.

Freedom Franchise then reopened the Julington Creek location under company-owned management. While members are welcome to continue using that location, many members who signed up for the Intracoastal location say that the Julington Creek location is less convenient and does not have the offshore fishing boats that the Intracoastal location offered. The franchise is not offering any refunds to disgruntled members.

As a general rule, consumers have little recourse to get membership fees refunded when a business closes its doors. The one exception to that general rule in Florida would be health clubs; Florida bans lifetime health club memberships, limiting them to three years. The club is also required to post a bond with the state that would be used to reimburse members if the club went out of business.

However, for other types of clubs, potential members need to review the membership contract very carefully before signing. Individuals should not hesitate to ask a club to add language that would allow them to get out of the contract and get their money back if a particular location closes. If written correctly, this added language could provide a contractual claim for reimbursement - confirming the specific amount to be returned to the member on club closure of a specific location and establishing a process to secure the repayment. Of course, if the entire business closes down, it may still be difficult or impossible to get your money back.

A spokesperson for Freedom Franchise Sales says that the company has made a good faith effort to provide boat services to Intracoastal location members. They are currently searching for a second location. Read more about the closing of a Jacksonville, Florida boat club at Left 'high and dry' after paying club fee.

If you live in North Florida and have a business legal matter, please contact Wood, Atter & Wolf, P.A., Jacksonville, Florida business law attorneys.

Any business owner, including franchisees and franchisors, knows how important it is to make the business more visible in order to attract more customers. An effective way to do this is through the use public relations. There are different approaches when it comes to public relations. On one hand, there are a variety of firms that cater to small businesses and franchises.  On the other hand, a savvy owner may follow the advice below to enhance their organization through their own efforts.

Work with news reporters. Instead of simply issuing press releases to the media, take the time to contact a local reporter and find out what they are seeking. If they are interested in a particular subject matter, you might be able to tailor your information accordingly to be more appealing. Not only does this increase the likelihood your information will be published or broadcasted, it also establishes credibility with the reporter and may lead to future opportunities. Also, be sure to learn about the reporter's publication. Reading some articles that they have authored and finding out who their target audience is will enable you to pitch to them more effectively.

Give money. Another way to enhance your business' public image is through donations. Many charitable community events offer special recognition for financial sponsors. In addition to raising awareness for your business, philanthropy also shows you care.

Host events and giveaway prizes. Events such as grand openings or open houses attract great attention from the public. It garners even more attention to have drawings for prizes. This will draw potential customers to your location. If you are not in a position to host an event alone, it may be possible to co-host with another organization.  Split the costs and share the benefit.

Continue reading "Exposure Through Public Relations" »

When considering a franchise purchase, the first thing on most investors' minds is: How much money can I make? Ever since the Federal Trade Commission (FTC) passed the franchise compliance rules of 1979, many franchisors will incorrectly tell prospective owners that they cannot share earnings information.

The FTC regulations specifically allow franchises to make earnings claims as long as they follow the specified rules. The FTC revised the rules again in 2007, and now calls these financial performance representations instead of earnings claims. Even so there are five reasons why a franchise might not disclose financial performance representations to you. They include:

1. They're too new to have a record of unit operations; putting forth numbers would be premature and possibly misleading.

2. They don't feel like investing the time and resources required to compile the data.

3. They don't feel comfortable with the accuracy of the data; this might be due to the way numbers are reported at the franchise level. They would not want to put out numbers that could be challenged as misleading.

4. Their attorney told them not to due to risks of disclosure.

5. The numbers are low and make them look like a bad opportunity for investors.

When a franchise opportunity you are looking into doesn't disclose financial figures, you need to find out why they didn't. If the answer doesn't satisfy you, dig deeper until you are satisfied. Find out more tips for qualifying franchises at The Truth About Franchise Earnings.

If you live in North Florida and are considering buying a franchise, please contact Wood, Atter & Wolf, P.A.

The decision to purchase a franchise involves many factors, but there are ways for you to increase your chances of making the right move. Having a frank conversation with the franchisor is a great place to begin; the following are some tough questions you should get answers to before you make your final decision.

One: Can you give me some specific examples of problems your franchisees have run into and how you helped them? A good franchisor will not be afraid to tell you about problems they have run into and how they learned from them. Listen carefully to see how well they support their franchisees when they run into problems.

Two: What are the personality traits that help people succeed with your franchise, and what are some that get in the way? When you get the answer, honestly evaluate which category you fall into.

Three: Can you tell me some reasons why you might turn down a franchise request? You want to sign on a with a franchisor who has standards for their franchisees. If they don't, that could negatively affect their perception in the marketplace.

Four: Are you currently involved in any lawsuits with franchisees, or have you been in the past? Don't let the answer scare you off; many franchisees and franchisors end up in court for one reason or another. Listen to what the issue was and see if they have taken steps to prevent it from happening in the future.

Five: Are you planning any major upgrades in the near future? Costs for technology or equipment upgrades may be your responsibility.

Remember, the franchisor may not be at liberty to answer all of these questions, but the more you can find out before writing your first check, the better. Read more franchising tips at 5 Great Questions To Ask Franchise Company Executives Before Buying A Franchise.

If you live in the Jacksonville, Florida or Orlando, Florida area and are considering purchasing a franchise, please contactWood, Atter & Wolf, P.A. for business law counsel.

Nimnicht Chevrolet of Jacksonville, Florida was one made of the country’s first GM Hummer franchises in 2002. The dealership built a multi-million dollar dealership for the brand, which included an off-road test drive course. But times have changed. Consumers are less interested in paying between thirty and forty five thousand dollars for an SUV that gets from thirteen to eighteen miles per gallon.

GM has recently had to shut down Hummer 2 production, and has been looking for a buyer to continue making the super-sized SUVs. GM recently announced that their efforts to sell the Hummer line to Chinese Sichuan Tengzhong Heavy Industrial Machines company has fallen through.

Nimnicht GMC-Hummer General Manager Jackie Lynch is still optimistic that another buyer will come along and save the Hummer brand. He reports that sales of Hummer have remained steady despite the uncertainty of the SUV’s future. The dealership reportedly sells seven to ten Hummers each month. In February, their stock was down to nine 2009 models and ten 2010 models.

Lynch said that Nimnicht will continue to sell and service new and pre-owned Hummers as long as the brand is in existence, and will continue to perform authorized warranty work on Saturns – another GM car line that was shut down at the end of last year.

Read more about Hummer and other GM brands that have been sold or ended at Jacksonville dealer says it’s business as usual despite Hummer’s demise.

If you live in the Jacksonville, Florida or Orlando, Florida area and have a business legal matter, please contact Wood, Atter & Wolf, P.A. for business legal counsel.

Jacksonville based fast food franchise Orange Tree Hot Dogs’ first restaurant was opened in 1968 at the Regency Square Mall by Peter and Carolyn Koppenburger. The family-owned business now has three corporate owned locations, eight franchise locations and is slated to open three more franchises in Florida this year, despite the slowing economy and stiff competition from A&W, Nathan’s Famous Hot Dogs, All American Hot Dogs, Sonic and other chain restaurants that sell frankfurters.

Orange Tree sells over a million hot dogs every year. According to Shawn Emling, co-owner and grandson-in-law of the original owners, “We didn’t reinvent the wheel with the hot dog, we just put a unique twist on it.” The franchise boils their Ball Park brand hot dogs and steams the buns – along with another secret step that makes the taste of their hot dogs one of a kind. They also make six hot dog toppings from scratch.

Emling reports that he eats two or three hot dogs a day; the average American eats fewer, but still puts away sixty per year according to the National Hot Dog and Sausage Council. The new Orange Tree Dog stores will be opening in Gainesville, Daytona Beach, Atlanta and Orlando, Florida and will of course serve the famous Orange Frost Drink along with their signature hot dogs.

Find out more about this story at Orange Tree Hot Dogs: A Jacksonville success story since 1968.

If you live in the Jacksonville, Florida or Orlando, Florida area and have a business law question, please contact Wood Atter & Wolf, P.A. for legal counsel.

The Beaver Street Enterprise Center is a small business incubator that opened its doors in Jacksonville, Florida in 2003. It was established by the nonprofit group, FreshMinistries, to nurture small businesses by providing entrepreneurs with reasonably priced office space, mentoring services and opportunities for networking with other business owners.

In the incubator’s first year, fifteen fledgling businesses provided jobs for sixty two Floridians. By 2007, the center’

s businesses provided almost five hundred jobs to Florida residents, most of them from Jacksonville. The total revenue produced by these businesses has grown to close to $10 million.

Successful businesses to come out of the incubator include A. Harold & Associates, Xeye, Inc., and a Burger King Franchisee who owns six Burger King stores. The University of North Florida’s Small Business Development Center also has a presence there. Most come for the $10 per square foot office rent, but stay for the networking and relationships. Entrepreneurs credit the center with providing them the focus they need to build their businesses, the contacts with other business owners who can provide guidance, and the opportunity to meet local bankers who can help finance their operations.

The Beaver Street Center is currently home to fifteen small business tenants, and has room for two more. The Center also supports fourteen home-based businesses with shared office space, equipment and training. In addition, the Jacksonville Hospitality Institute offers a nine-week course, held in the Center, which prepares students for a career in hotels or restaurants.

Find out more about this small business incubator at Jacksonville small businesses get chance to grow on Beaver Street.

If you live in the Jacksonville, Florida or Orlando, Florida area and run a small business, please contact Wood, Atter & Wolf, P.A. for business legal counsel.

With millions of people unemployed and fierce competition for jobs, many people are considering self employment. Currently, one of the most popular self employment options is to buy and run a franchise. A recent web article by a franchise financing bank gave prospective buyers a few helpful tips on finding and financing the right franchise opportunity.

According to the International Franchise Association, there are over 1200 franchise brands available in the US. Buying a franchise in an area that interests you is the first step to success. Second, you should consider the amount you are able to invest. The investment requirements for different franchises can vary widely; if you do not have a lot to invest, that will rule out some of the higher priced opportunities. One source of fuding that many people forget is their retirement savings. While the best thing to do with retirement dollars is to "leave it for retirement," in these difficult times, all financing avenues should be considered. The Employee Retirement Income Security Act of 1974 allows people to finance a franchise purchase from existing retirement savings with no taxes or penalties.

Finally, perform thorough due diligence on any franchise you are interested in before signing any paperwork. Enlisting the services of a CPA and attorney who specialize in franchise ownership is critical. If you live in the Jacksonville, Florida or Orlando, Florida area and are considering purchasing a franchise, please contact Wood, Atter & Wolf, P.A. for legal counsel.

Read more about finding and financing a franchise opportunity at How to Choose and Finance a Franchise Opportunity.

Looking to purchase a franchise? In today's marketplace there are hundreds of businesses to choose from if you want to purchase a franchise. So how do you narrow the field and find the right franchise for you? Consider these few items.

First, what kind of business are you interested in? The selection of franchise opportunities to choose from is as vast as the goods and services available on the market today—from haircuts (Great Clips®)to cleaning services (Jani-King), to package shipping (Postal Connections ™), to restaurants (Baskin-Robbins ®). You should find a business that interests and excites you, so that you can combine passion and profession.

Next, how much is the initial investment? Franchises can range from several thousands of dollars on the low end to over a million dollars on the high end. Usually there is a correlation of the cost to gross sales and profits, but that's not always the case. For example, McDonald's restaurants, cost one to two million dollars for start up and do an average of over two million in gross sales annually, profiting typically in the six figure range.

The best way to gauge financial success is to meticulously go over the Franchise Disclosure Document with a franchise lawyer, a business and franchise consultant, and an accountant. To that effect, an established franchise, such as McDonald's or Baskin-Robbins ®, may have more predictability when it comes to success than a new franchise; however, a newer franchise opportunity may have more room for growth.

Hopefully, these tips will give you a starting point ifor thinking about a business or franchise investment.

A Tallahassee, Florida, Saturn dealer filed suit against General Motors Corporation earlier this year for violating Florida's franchise laws, but Saturn of Tallahassee's chances of prevailing are not likely. The dealership is co-owned by former NBA player Bob Sura. General Motors announced earlier this year that it plans to sell or eliminate the Saturn brand sometime in 2009, and cut nearly 2,400 dealerships from its network of dealers. After seeing sales drop over 70 percent this year at his Saturn of Tallahassee dealership, Sura feels that General Motors has made his Saturn franchise worthless. In effect, the Saturn of Tallahassee dealership feels it has been wrongfully terminated.

The problems for Saturn of Tallahassee in prevailing in its lawsuit against General Motors lie in the fact that General Motors is now in Chapter 11 bankruptcy and may simply terminate the franchises as part of its restructuring process. If so, Sura and his dealership may be left to accept whatever decisions the Bankruptcy Court makes. Sura and other Saturn dealers' best hope may rest upon finding a new buyer for the Saturn brand and maintaining the goodwill it has developed with its customers over the years; several groups have expressed an interest, including some Saturn dealers.

Auto dealership franchises have to make some of the largest investments of all franchise opportunities available on the market. Like all franchisees the money they spend in advertising and building goodwill benefits the franchisor as well as their own franchise. When a franchisee is in compliance with the franchise agreement and is wrongfully terminated or denied the opportunity to renew their franchise, the franchisee has lost the value of their investment.

If you have experienced franchise renewal problems with your franchisor, or you just have questions about franchise agreements in general, ask an attorney for help.

Is it actually true that a franchise was terminated over one under-portioned sandwich? In a case that was finally decided at the start of this year, it appears that was exactly what happened to a Pennsylvania couple—owners of a Quiznos franchise. They were terminated after a secret shopper purchased a Prime Rib Philly Cheesesteak sandwich at their Quiznos store.

In 2006, as part of a national advertising campaign being planned by Quiznos in which Quiznos planned to claim its sandwich contained twice as much meat as Subway's comparable sandwich, Quiznos sent out secret shoppers to several of its franchisee locations to purchase Quiznos' Prime Rib Philly Cheesesteak sandwiches. The purpose was to make sure each sandwich contained at least 4.5 ounces of meat. A secret shopper at the Pennsylvania franchisee's store purchased a sandwich that purportedly only had 4 ounces of meat. Quiznos sent out a letter terminating the franchisee. Although Quiznos claimed their plan was to allow the franchisee to cure the default, Quiznos sued the franchisee only two days after sending them the termination letter. In January, the franchisee won their case for wrongful termination, being awarded $349,797.00, plus fees, court costs, and post judgment interest.

It can be intimidating for a single franchisee to contemplate going to court with their franchisor, especially if the franchisor is large, but franchisees need to remember, the courts are not looking at the size of the litigate they are looking at the strength of the litigant's case. If a franchisor has terminated a franchisee in violation of the terms of the franchise agreement, then a single franchisee should not be afraid just because of their size to do what is necessary to protect their investment.

Dispute resolution is an important term in a franchise agreement. Franchise agreements can have forum selection clauses, arbitration clauses, and choice of law clauses, among other dispute resolution options. When Congress passed the Federal Arbitration Act, it brought the use of arbitration onto equal footing as other dispute resolutions options and the traditional venue of the courts. Not long thereafter, arbitration came to national prominence and became a popular option for franchisors to use in their franchise agreements.

Current research has shown that over the last ten years, the number of arbitration clauses in franchise agreements has remained relatively stable (in a little less than half of the franchise agreements). Today, some groups want to eliminate required arbitration clauses in franchise agreements. Currently, there is a bill in Congress: the Arbitration Fairness Act. One provision of the Arbitration Fairness Act would make mandatory arbitration clauses illegal in franchise agreements. This act is opposed by the International Franchise Association. Some franchisors, however, are moving away from arbitration clauses by their own choice; for example, General Nutrition Centers Inc. has quit using arbitration clauses in their franchise agreements.

If you are a franchisor, whether or not to use an arbitration clause is a matter of weighing a number of factors. Sometimes a choice of forum and choice of law provision may be the better option. These decisions are best made with the assistance of a franchise attorney. If you are a franchisee, have an attorney review the franchise agreement before you sign the agreement or renew your franchise agreement.

When it comes to opening a new franchise, prospective franchisees face many issues, but one issue that often ends up in court when franchise relationships fall apart is territory disputes—typically the argument is that there was territory encroachment. Territory encroachment and territorial concerns come in many ways, such as: requirements to develop the territory to a specific level of profitability in a certain amount of time, whether the franchisee has the right of first refusal to develop territory bordering the franchisee's existing territory, factors that might change the nature of the territory (i.e. population, development), and how 'exclusive territory' is determined (i.e. by population, geography, number of customers).

When contemplating purchasing a franchise it is important that franchisees look closely at whether the territory is exclusive and under what circumstances the territory—even exclusive territory—may be encroached upon. There are many ways franchise territories may be encroached upon. For instance, a salon franchisee may be given an exclusive territory and licensed to sell the franchisor salon's particular shampoo product, but then the franchisor salon may sell that same shampoo product in a local grocery store. Obviously, the franchisee could lose business and money by such an arrangement; even though, the franchisor never opened a competing salon in the franchisee's exclusive territory.

Because there are many such concerns with regard to territory, if you are interested in opening a franchise or are already in the franchise business, you should review any Franchise Agreement and Franchise Disclosure Documents with an attorney familiar with franchise law. Have you ever experienced a territorial issue with your franchise or business, feel free to comment or share your experience?

To succeed, a franchise must identify a need in the marketplace, and fill that need. Particularly in today's economy, finding a niche can mean the difference between downsizing, maintaining, or growing your business.

Franchises that find that niche can be successful even in otherwise languishing industries. Here is sampling of a few franchises that have found their niche:

1) The dry cleaning business has been around for decades without seeing any franchises experiencing significant growth. However, Certified Resotration Dry Cleaning Network has found its niche by focusing on dry cleaning clothing and household items damaged by smoke for insurance companies.

2) Rescuecom's niche is providing onsite emergency computer repair 24 hours a day 7 days a week.

3) Finally, many fitness centers are now transitioning away from the do-it-all exercise and work out centers to smaller specialized fitness centers targeting specific clientele such as women or men only or specific workouts like aerobics or weightlifting.

The great thing about finding a niche is that it does not cost money; it just takes a little instinct and a lot of thought. If your business is struggling in these hard times, see if there is a niche you have been missing that could open the doors to some additional revenue.

As I've been watching the changes in the in-home movie rental business and the continuing decline of the Blockbuster chain, I began to think about how critical it is for franchisors and potential franchisees to try to imagine what their particular field of business is going to look like in ten years. Franchising provides a great opportunity to own a business without having to invest a lot of money, but beware! Purchasing almost any franchise is still an investment and most franchise agreements are binding for at least ten years. The last thing you want is to invest in a franchise, only to have that industry becoming obsolete in a few years.

To use home the in-home movie rental business as an example, look at the changes that have occurred over the last ten years—VHS and VCR movies have become antiquated. DVRs (digital video recorders) like Tivo record several hours' worth of television, in HD, and allow rewinding or slow motion replay of live programming. And at my whim, I can order a recently released movie On Demand, for little or no cost.

Technology's evolution is not the only change that has occurred in the in-home movie rental business. As our society gets even faster paced, people have become much more conscious about saving time, and have become master multi-taskers. People want to eliminate excess trips to the store; if they can make one trip to buy their groceries, prescriptions, and movies, they are going to do it. Thus, we have seen a steady decline in Blockbuster franchises and an explosive growth in Netflix and Redbox kiosks.

So how would you evaluate the success or decline of a franchise? First, do some research and consult with a business expert to help you carefully consider how changes in technology or society might affect your industry of interest in both the short- and long-term. I team up with the franchise experts, Alpha Growth Strategies, and encourage my clients to consult with them. Second, bring a franchise attorney a copy of the business' Franchise Disclosure Document. The attorney can explain what your rights and obligations will be for the term of your Franchise Agreement.

Amidst a slew of franchise disputes between deposed dealers and General Motors and Chrysler, Ron Bloom, head of the automotive task force for President Obama, addressed Congress and advised that the reinstatement of terminated franchise agreements could jeopardize the car companies' return to profitability.

As discussed in a previous post, GM is planning to shut down over 2,000 of its dealerships and Chrysler is looking at eliminating 789 of its own. However, a bill was recently approved by the House of Representatives to undo those cutbacks. Some dealers are even resorting to franchise suits in state courts to prevent forced closings. Mr. Bloom indicated that the reductions are critical to streamline the operations of the two troubled automakers.

Sadly, I think that the dealership closings may be necessary at this stage, but the blame lies squarely on the shoulders of GM and Chrysler for allowing their networks to become bloated and saturating markets with dealers as opposed to employing the controlled outlet strategy of import car manufacturers. It's a shame that hard-working business owners are having their stores taken from them through no fault of their own. Their collective mistake was betting on the wrong horse!

More than ever, American franchises are contemplating foreign expansion as possibilities in the United States remain stagnant. The two most populous nations in the world, China and India, are key areas for growth and feature rapidly-flourishing intermediate consumer bases.

McDonald's has long been exemplary in terms of its global franchise model. In 2009, McDonald's opened just 53 new restaurants in the U.S., whereas internationally, it opened 286 new locations. This isn't simply an aberration, but has been the trend for the last couple of years. Meanwhile, McDonald's global sales have jumped 7.2%!

The reluctance of U.S. lenders to issue loans has hurt American franchising, but abroad, third-party investors are frequently willing to back projects financially. This becomes a mutually advantageous relationship as foreign investors reap the benefits of well-established, clearly defined American brands. People instantly recognize those double arches! In light of such symbiosis, international markets are ripe for development and can support sustainable growth.

How can your business grow in these challenging economic times? Want more tips and strategies? I do too. That's why I count on my business and franchising experts, Alpha Growth Strategies. I work closely with them to give my clients the edge in business development.

Reading through the news today it seems restaurant franchises are willing to do just about anything right now to get customers in the doors. The major hamburger franchises have always offered toys and collectable glasses to purchasers of certain meals. Additionally, some of the larger franchises conduct games annually, or almost annually, where customers can win high dollar prizes, including cash—think McDonald's® Monopoly® game. Kentucky Fried Chicken just unveiled a new sandwich with no bun! Yes, I said no bun. Other Franchises such as Tropical Smoothie Cafés and CiCi's Pizza are offering customers the chance to win VIP trips to Hollywood studios and Pizza parties where families can get coupon books.

Not every business has the financial resources like McDonalds® or other larger franchises. So what does a smaller franchise or business with more limited resources do to get the customers to their stores? I think one thing franchises can do is focus on their core customers. Offer a specific gimmick that would appeal to this unique group. Another strategy is joint advertising promotions. This means teaming up with a complementary business, and develop a promotion to benefit both businesses.

What kind of approaches are you using to maintain and grow your business or franchise in our current economic times? Are they working? Please, feel free to share.

 Gap Inc. has inked a new franchise agreement that will yield new Gap stores in Thailand. Armin Systems Limited, a retailer in Thailand, has been designated as licensee and will open the first Gap location in Bangkok in the spring of 2010.

The Gap is the biggest independent retailer and includes the Banana Republic, Old Navy, Piperlime, and Athleta brands. Along with its partners, the Gap has opened 100 Gap franchise stores plus 34 Banana Republic franchise stores in 17 countries. Across North America, Europe, and Japan, the Gap has over 3,100 locations.

Despite this already sizable network, the company is looking to emerging regions to help buoy sales as the recession has curbed spending in the United States. The Gap clearly understands the importance of spreading internationally and getting its name out to more and more areas.

On the other hand, oversaturation of markets also can be a concern so it is crucial for companies to tactically place their locations to provide the widest consumer access possible without any overlap. Remember when you couldn't walk one block without seeing three Starbucks? It was forced to scale back because it had flooded cities with shops! It's definitely a fine tuning act to open new stores without creating too much supply and is one that shouldn't be done without proper advice.

Want to strategically expand your business? A methodical franchise attorney can help you increase your branches the right way!

In the wake of the worst American recession since the Great Depression, plummeting vehicle sales, and impending Chapter 11 bankruptcy, embattled automaker General Motors announced in 2009 that it would end franchise agreements with 1,270 dealerships across the country in 2010. Of its eight current nameplates, Pontiac will be eliminated, and Saturn, Saab, and Hummer all have been sold off.

GM stretched itself too thin and saddled itself with an inflated number of uncompetitive brands. The irony of the situation is that GM is finally showing flashes of potential and is producing desirable cars (e.g. the ZR1, CTS, and upcoming LaCrosse) after years of bad engineering, bean counting, and allowing that cut-corner mindset to adversely affect the quality of its cars.

The damage is likely to get much worse: GM is seeking to slash the number of dealerships by a total of approximately 2,400 by the end of 2010. GM failed to strategically align itself globally, made poor agreements with the United Auto Workers, and neglected to value engineering and the quality of its products above all else. GM made its own bed and has to sleep in it. Regrettably, now thousands of dealers may have to pay the price for GM's ineptitude.

Although GM launched an pathos-packed campaign (including a television commercial!) to re-new its tarnished image and gain America's support, how would you feel if you were abruptly dropped after a franchise agreement you had worked hard to negotiate and uphold? I would be livid if I lost my business due to the mismanagement and incompetence of my franchisor!

How do GM's actions strike you? Is it fair to the franchisees? Contact me to discuss!

A highly effective way to expand your business is franchising, but what makes some franchisors more successful than others? The following tips may guide your decision-making process as you grow your company through franchising.

It is important to work with a reputable and experienced franchise development company. Even as a franchise attorney, I turn to my business development experts at Alpha Growth Strategies to review and advise as to the best way to make business take off. Select a company that is willing to assist you throughout the franchising process, including negotiating leases and making financial projections, and not just with producing contracts and the Franchise Disclosure Document.

Also, don't be frugal when it comes to your initial investments in a franchise operation. Typically, franchisors who enjoy success are those who invest in state of the art computer and IT systems. Communication and information is the foundation of any business venture. Additionally, select a location for the franchise headquarters that includes room to expand and that will deliver a positive first impression to prospective franchisees. These may seem like unreasonable expenses at first, but the extra investment will pay off with a higher rate of franchise purchases in the future.

Finally, hire a good public relations firm with experience in the field of your business. Such an outside source of expertise will help generate ideas to distinguish your company from others in the market place.

Once you have developed a business plan and established a franchise, it is important to stay connected with your franchisees. Your success, in the form of license and franchise fees as well as profit sharing, may depend largely on their success. Therefore it is vital that you are able to be their guide. Consultants in the field of franchising have identified various ways to deliver messages to business contacts.

The use of newsletters is one of the more traditional methods of sharing information. For example a franchisor may send franchisees a monthly newsletter to discuss brand ideas as well new marketing insight. In addition, an innovative franchisor will solicit feedback and advice from franchisees about their particular operation. This will provide material for future newsletters. In this manner, each franchisee may benefit from the collective knowledge of the whole group. Another way to disseminate information is through videos. This is especially useful in situations where language barriers are present, such as international restaurant franchises.

Of all the communication methods available, intranets are the most revolutionary because they can relay information in an instant. An intranet is a private computer network that transmits secured information between users. This is different from the Internet, where the public has general accessibility to data. Franchises using intranets benefit from message boards or chat boards where franchisees can post messages or get quick advice from each other. Therefore franchisees save time and money as they are able to get help with problems almost as they arise.

For various reasons, a franchisee may want to get out of a particular business and sell the franchise. But is this permitted? Can a franchisee sell a franchise or is this something only franchisors can do?

In general, the answer is yes, however some conditions may apply depending on the Franchise Disclosure Document (FDD). In addition to governing operational issues such as royalty fees, the FDD often contains provisions regarding franchise resell. For example, the original franchisor usually reserves the right to approve new buyers. This provision protects the franchisor as well as other current franchisees by preventing under-qualified individuals from becoming business owners and besmirching the business reputation and consumer good will. On the other hand, the franchisor's right to approve the new buyer might serve as a detriment by hindering the franchisee's ability to sell the business.

If you are considering purchasing a franchise, examine the FDD to fully understand the terms of the franchise agreement. Particularly, look for provisions that might affect franchise resell if you are unsure of long you want to own the business. It is important to identify undesirable aspects of the FDD because a franchisor may be willing to negotiate. In any event, it is not advisable to enter any purchase agreements without first consulting a franchise attorney.

Like other entrepreneurial individuals, you may have thought about purchasing a franchise but do not know where to start. Though we use goods and services provided by franchises on a daily basis, information about buying the actual business does not always appear to be so readily accessible. In reality though, the information is easy find if you know what you are looking for.

Before looking at any specific franchises, determine what type of business most appeals to you. For example, if you have enjoyed working in food service over the past years, you might prefer a restaurant franchise or other similar food service oriented business. On the other hand, it is not advisable to purchase a franchise related to past negative work experiences.

Then, assess whether that type of business is economically feasible in your geographic area. Just because you like a business idea does not necessarily mean customers will. Accomplish this by examining other franchises in the area that have endured throughout the years. I usually refer my clients to a franchise development consultant, like Alpha Growth Strategies, to assist in evaluating potential sites.

After determining what type of business will fit both you and the area, your search for franchise opportunities will be more focused. Find information about specific business at the Franchise Registry. The Franchise Registry lists businesses that are approved by the Small Business Association as being fair.

Don't go about evaluating franchise opportunities alone! For more advice regarding franchise opportunities or purchasing a franchise, contact a franchise attorney to schedule a consultation, and be sure a franchise development consultant participates in the meeting.

Despite a poor economy, a weak job market, and an increasing number of layoffs, now is a great time to buy a franchise. The number of franchises in the industry has increased and created competition among franchisors, which are becoming more aggressive in recruiting franchisees.

Some franchisors have resorted to attracting buyers with discounts on initial fees and costs. For example, one company announced that it would waive a $30,000 franchise fee for qualified military veterans.

Other franchisors have developed creative tactics to target nontraditional franchisees. One such tactic is to offer employee discounts. This plan encourages employees to purchase a franchise by rewarding high performers with a discount on the initial franchise price. The resulting franchises are often highly successful because the franchisee is better-trained and less likely to make costly mistakes.

Franchisors are also offering money-back guarantees to reduce the uncertainty associated with buying a business. A typical guarantee provides that if the business has not reached certain revenue goals after the first year, the franchisor will buy the franchise back. In most cases, the guarantee is only valid if the franchisee follows franchise guidelines in operating the business.

It is a buyer's market when it comes to franchises. In light of this competition, be aware that many franchisors are willing to negotiate fees and payments structures. If you have thought about purchasing a franchise, consult a franchise attorney for advice and assistance with the acquisition.

If you have a successful business, you may want to consider expanding through franchising. By franchising, you can grow larger and faster because the franchisees provide the funds for the growth, not you.

One important issue to consider before franchising is whether you have developed a strong trademark for your business. This is crucial because a strong trademark delivers a consistent message to consumers about your franchise's products and services. Franchisees will pay higher royalties for a franchise like Subway, which has a nationally reputed trademark, than they will for a franchise with little or no consumer recognition.

In the very least, be sure to register your trademark before franchising. Registration provides a presumption that your trademark is valid. This will facilitate any claim of infringement in the unfortunate event that one of your franchisees attempts to improperly license or use your trademark.

A strong trademark is a term or phrase that does not merely describe the goods or services. Rather, strong trademarks require imagination, thought, or perceptions to link the mark with the provider of the goods or services. Such marks may suggest the quality of the goods or services, or may not have anything at all to do with the goods or services. For example, Greyhound might imply that a bus line provides fast transportation. Apple, on the other hand, may have nothing to do with a line of computers.

Franchises are built upon sound business models. However, buying into a franchise does not always guarantee success. As a potential business owner, financial success depends on whether or not you are diligent and avoid some of the common mistakes new franchisees often make.

Commonly, a franchisee proceeds to purchase a franchise without fully understanding the terms in the franchise disclosure document (FDD), the document outlining the franchisee's and the franchisor's responsibilities. This results in later misunderstandings between the parties, such as conflicts in fee scheduling and grand opening dates. If you are thinking about buying a franchise, a good idea is to create a list of questions that arise when you review the disclosure documents. Go over this list with your attorney at a later time. Also, present the list to the franchisor for written clarification to your questions.

Another mistake is failure to contact enough current franchisees. By speaking with other franchise owners, you will be in a better negotiating position because you can compare the offer the franchisor made you with offers made to other franchisees. Contact current franchisees other than those referred by the franchisor. In this manner, you will come to understand both positive and negative aspects of the franchise.

Similarly, franchisees also do not investigate failures within the particular franchise. When contacting other owners, find out what has and has not worked for that business. This will help avoid costly mistakes and may even save your franchise in the future.

Avoid these mistakes by contacting an experienced franchise attorney to set up a consultation.

Most potential franchisees face a common impediment: money. The start-up fees and capital costs of a new venture can be extremely onerous and may even prevent many small businesses from launching. One solution to these costs is to finance with a Small Business Administration loan. Lately, however, potential franchisees are finding it increasingly difficult to obtain credit. To answer this obstacle, the International Franchise Association recently began campaigning to increase available credit for small business start-ups.

In this lagging economy the credit market has become rigid. As a result, SBA guaranteed loans decreased substantially in the last year. The IFA continues to champion small businesses and franchises as the cure to the recession. In support, the IFA reports that such entities are responsible for 60 – 80 percent of jobs created each year. Further, every $ 1 million invested or loaned to franchises and small business creates 34 jobs and over $3.5 million in total returns. The IFA has presented a two prong proposal for Congress. First, Congress should encourage banks to generate loans by reducing SBA lender fees. Second, Congress should eliminate the current SBA loan limits and allow the market to govern loan prices. This is will further encourage banks to issue loans for small businesses and franchises.

The IFA provides a template email and urges small business owners to take action to see these proposals through by contacting their Representative or Senator.

Veteran franchise owners advise initial start-up costs can become excessive if you are impatient. In other words, rushing to open your business almost always costs more in the long run. The following tips provide ways to reduce franchise start-up expenses by deliberate decision making.

Negotiate fees: While fees are generally the same so that all franchisees are treated equally, contact existing franchisees to see what their fees were. If there is a deviation, even slightly, find out the reason for the lowered fee, and see if you can qualify for the same discounted rate. This will put you in a better position to negotiate with the franchisor.

Package Deals: Some franchisors offer a package franchise, also known as a turnkey package. In these arrangements everything needed to begin operating the business is included for one price. For example, the franchisor or a third party may supply the inventory, the physical store, and all the equipment for operating the business. Turnkey packages benefit franchisees by saving time because franchisee does not have to acquire and organize the resources on their own. On the other hand, turnkey packages are more expensive because the added convenience adds to the price as well.

Shop For Equipment: When starting a franchise, many business owners fail to shop around for equipment. It is a good idea to get as many prices for equipment as possible in order to determine a reasonable price range. Also, by obtaining bids from multiple sources, you can negotiate with your selected supplier for even more savings.

Used Equipment and Fixtures: Purchasing used equipment for your business can translate into substantial savings. Just make sure the items meet your franchise guidelines. For example, buying used commercial kitchen appliances for a restaurant or used display shelves and fixtures for a retail store and greatly reduce the initial cost of operating.

Facing the reality of being laid off by your company, you may have considered the prospect of owning your own business. While there are various entrepreneurial avenues to financial independence, many people are turning towards becoming franchisees. But what businesses are available for purchase?

Many franchise websites offer lists of available franchises. In particular, you can narrow your search by industry type, stay-at-home solutions, or environmentally sound "Green" franchises such as cleaning services, which employ eco-friendly detergents that do not contain CFCs.

Many franchises offer a proven business model as well as a widely recognized brand. With the necessary capital and initiative, you can soon be at the helm of your own business.

Such online lists of franchises are a good starting point to determine what type of franchise you intend to procure. But instead of entering into any agreements online, you can avoid potential scams by contacting an experienced franchise consultant, and consulting with a franchise attorney.

Many people consider purchasing a franchise, but what about the other end of the franchising industry: expanding their own business and becoming a franchisor? Not all businesses translate into good franchises, however. So how can you determine whether your business will succeed as a franchise?

Good franchises share a few common elements. First, your business plan should include goals and objectives in order to identify your client profile. As the franchisor, keep in mind that your client is not the end consumer, but rather the individual purchasing your franchise. To advertise more effectively, determine the precise client demographic your franchise would most likely attract.

A business plan should be easy to replicate. One way to accomplish this is to have a plan featuring specific details, right down to daily operations and training. Franchisees are often people who want to run a business, but wish to forgo the trial and error inherent in building a business from scratch. Therefore, your product should meet their needs in providing a business ready for operation without undue experimentation.

Finally, determine how many stores a geographical region can support. Do not make the mistake of allowing too many franchises operate within a close proximity to each other. This inevitably results in competition among your franchisees.

Wood, Atter & Wolf recently hosted an exhibit at the 2009 Business & Career Expo, hosted by the Jacksonville Regional Chamber of Commerce at the Prime Osborn Convention Center. Admission was FREE to the public!

We showcased Trademark and Franchise law with Alpha Growth Strategies, who are experts in business development and franchising. Together, we featured legal and business consultations regarding trademark registration, licensing, and business/franchise evaluations.

The Expo featured 250 exhibits, and attracted over 1500 people. For more information on next year's event, contact us.

If you have been involved in a franchise deal in the past few years, you may be more familiar with the latter term in the title: the Uniform Franchise Offering Circular, or the UFOC. However, as of July 2007, the Federal Trade Commission has replaced the UFOC with the FDD. Despite this change, the term "UFOC" is still widely and incorrectly used. Now, the FDD is the document that a franchisor must provide to potential franchisees prior to entering into a contract.

Like the UFOC, the FDD discloses details to potential franchisees in order to facilitate an educated buying decision. However, the FDD is different form the UFOC is several aspects.

Differences between the FDD and the old UFOC include different time requirements governing when such disclosures must be made. Also, unlike the UFOC, both parties can use passwords and electronic signatures to electrically sign an FDD.

Perhaps the most important change provided by the FDD is the requirement that the franchisor disclose more detailed information to the franchisee. Such newly required disclosures include information about parent companies; information regarding lawsuits or bankruptcies; whether any interest exists between approved suppliers and franchise executives; information about the types of distribution channels the franchisor or other franchisees use; and finally data regarding how many franchises were sold, terminated, or transferred over the past three years.

As you consider if and which franchise to purchase, be sure to pay close attention to the FDD. It should be an in-depth disclosure, with each paragraph having legal or strategic significance. For guidance with the UFOC, contact an experienced franchise attorney and a franchise consultant.

If you're thinking of acquiring a franchise, it is a good idea to first investigate the company. Although there is no uniform database that will inform you whether a company is operating legally or in good faith, there are a few leads to utilize in your investigation.

Find out if the company has registered with the Better Business Bureau or if anyone has filed a complaint against the company. You can discover if any complaints have been filed by contacting the Federal Trade Commission. Simply send a written request for information to the following address. Include in the letter the name of the company of interest as well as your name and address. Often, this is a free service to the public. The address: Freedom of Information Act Request, Federal Trade Commission, Washington, D.C. 20580.

Also, you can check out the applicable state agency for registering business opportunities. In Florida, franchisors are required to file with the Florida Department of Agriculture and Consumer Affairs, Division of Consumer Services.

Another fact to consider is whether the company has changed its name in the past. Businesses that alter their name and change their address of operation may have something to hide or wish to avoid accountability. Furthermore, it is a good idea to obtain the contact information of 10 prior franchise purchasers. Get in touch with them to find out how this franchise has dealt with others in the past. Also, make sure these references are legit and not just paid by the franchisor to give a good review. Finally, another good idea is to find out the number of other franchisees in your geographic area. It may not be a good idea to enter a saturated market.

Above all, when deciding whether or not to purchase a franchise, you can never be too careful. Not only should you consult with a franchise attorney to cover the legal requirements, but you should also consult with a franchise consultant. I recommend Alpha Growth Strategies, whose expertise can benefit any franchise across the country. They can be contacted at 417 Cheryl Court, Jacksonville, FL 32259.

Yahoo! Finance recently published an article listing the top 15 franchise failures for 2008. They based the ranking on the rate of Small Business Association (SBA) loan defaults among franchisees. Yahoo! cited the troubled economy as the major factor for the failures.

Topping the list were Noble Roman's Pizza, with 53% of franchisees defaulting on their SBA loans, PJ's Coffee and Tea Café, with a 50% default rate, and Super Suppers, with 42% of the gourmet prepared meals franchise failing. Pizza franchises seem to have fared the worst out of all the business types, with five of the fifteen biggest failures being pizza franchises.

What can potential franchisees take way from this story? If you are considering opening a franchise, it is important to do your due diligence. Take a close look at which franchises are failing and why, before you take out an SBA loan. You should scrutinize the Franchise Disclosure Documents and the Franchise Agreement with the aid of an experienced franchise attorney. An attorney can also help you conduct research into the parent company's background, which is invaluable in helping you to better understand the financial aspects of the business, and to determine whether there are red flags pointing towards the business' demise. Please contact our firm for Franchise legal counsel.

To find out more about these unsuccessful franchises, visit Top 15 Franchise Failures.

The 3 Golden Rules in determining whether a business is franchiseable are whether: 1. There is a UNIQUE concept 2. The operations are SIMPLE, so that it can be replicated and easy to train 3. The business has a history of FINANCIAL SUCCESS

Gordon Ramsay, the notoriously razor-tongued head chef on Fox's reality show, "Hell's Kitchen," is hosting another show called "Kitchen Nightmares." "Kitchen Nightmares'" premise is much broader than that of its predecessor, because Chef Ramsay not only critiques the menu items, but also the way the business is operated. Each episode focuses on a quaint Mom & Pop restaurant in desperate need of an overhaul. Think of a marriage between "Trading Spaces" and "Nanny 911."

Chef Ramsay addresses problems by sampling the menu, rummaging through the inventory, observing the work habits of the owners, managers, and chefs, and considering the decor in the establishment. As expected, he will eat "the worst meal" he has ever had. Surprisingly, however, he will find moldy cherry tomatoes in the same container as fresh ones, or cooked chicken stored with its raw counterparts. And typically, Chef Ramsay will identify communication problems among those running the restaurant, as well as ambition or respect issues within those individuals.

Chef Ramsay's remedies often include simplifying the menu. In one episode, he made the ingredients easier to obtain by choosing supplies from local farmers. His remedy also includes defining and delegating very specific responsibilities to each owner or manager. And finally, he gives the restaurant a face-lift. It's worthy to note that he doesn't do any renovating, and he often leaves the fixtures as they are, but his creativity totally transforms the dining room atmosphere. In an episode with a waterfront seafood-themed restaurant, he added miniature fish bowls at each table, and gave diners a piece of rope with a guide to tying nautical knots while waiting for their food. The "little" things and a coat of fresh paint often made for an astounding presentation.

In essence, Chef Ramsay made these restaurants franchisable. By offering fresh, simple, yet gourmet menu items, and serving in an aesthetically pleasing dining room, he made the products and the service UNIQUE. By delegating management responsibility, streamlining food preparation, and implementing hygenic procedures for food storage, he made the business method SIMPLE. And finally, of course there are always panning views of the customer line out the door, to show that this is a FINANCIALLY SUCCESSFUL operation.

Are you a business owner? Would you like a Chef Ramsay-style consultation (minus the curt insults) of your operation to determine whether it is franchisable, or find out what you can do get it to that stage? Is your business at the stage to prepare it for franchising? Arrange a consultation with me.

One of the biggest misconceptions is that an idea can be patented. Even a Yahoo or Google search about patenting an idea will lead people to believe that this is the case. Often, I will have a creative mind book a consultation with me to discuss patenting an idea for an invention. Truth be told, their ideas usually are very good ones. However, they have no idea how to make or build this invention. For example, if someone told me that a great invention would be a machine that would stop world hunger. Although it's a fantastic idea, unless this inventor knows how to build one, there is no patentable subject matter.

Building a business so successful that others want to emulate it is the ultimate American Dream. However, going big has its restrictions. Even without formally calling it a "franchise relationship," if the arrangement walks like a franchise, and talks like a franchise, chances are....

The Federal Trade Commission (FTC) defines a commercial relationship to be a franchise when:

(1) the franchisee is permitted to use the franchisor's trademarks;

(2) the franchisor has the ongoing right to control significant aspects of the franchisee's operation; and

(3) as a condition to continue this relationship, the franchisee pays the franchisor.

When a business relationship falls under this franchise relationship, the FTC requires that the franchisor discloses specific information to the franchisee. The items to be disclosed are outlined in 16 CFR 436.

The new disclosure requirements came into effect in July 2008. The FTC has an excellent FAQ page to address questions concerning this amendment. It is a fantastic resource for franchisors and franchisees.

The Federal Trade Commission requires that a franchisor provides potential franchisees with Franchise Disclosure Documents compliant with 16 CFR 436 at least 14 calendar-days before the prospective franchisee signs a binding agreement with, or makes any payment to, the franchisor.

The itemized list of information franchisors are required to disclose to potential franchisees are:

1. The Franchisor and any Parents, Predecessors, and Affiliates

2. Business Experience

3. Litigation

4. Bankruptcy

5. Initial Fees

6. Other Fees

7. Estimated Initial Investment

8. Restrictions on Sources of Products and Services

9. Franchisee's Obligations

10. Financing

11. Franchisor's Assistance, Advertising, Computer Systems, and Training

12. Territory

13. Trademarks

14. Patents, Copyrights, and Proprietary Information

15. Obligation to Participate in the Actual Operation of the Franchise Business

16. Restrictions on What the Franchisee May Sell

17. Renewal, Termination, Transfer, and Dispute Resolution

18. Public Figures

19. Financial Performance Representations

20. Outlets and Franchisee Information

21. Financial Statements

22. Contracts

23. Receipts

Exhibits

A. Franchise Agreement

For help preparing or reviewing these documents, contact an attorney who is familiar with Franchise Disclosure Documents and Franchise Agreements.

So your business is successful. You have a proven business model with effective marketing and distribution systems in place. You are producing profits and steadily capturing market share. Yet, you ask yourself, "How can I take my operation to the next level?"

On the other hand, you may be trying to start up a business, but be tired of re-inventing the wheel. You want to own your own business, but don't know what policies and procedures to implement. You wonder, "Isn't there an easier way to improve my chances of success?"

Franchising can sometimes be the fitting solution. A franchise is a relationship between a franchisor and a franchisee. Franchisors are those who seek to expand their reach beyond a local or regionalized market. Franchisees are the ones who get access to an established brand, a proven business model, and marketing and supply support. In exchange, the franchisor collects a front-end fee, ongoing royalties, and the ability to increase brand recognition and market share on a larger scale.

Entering into this relationship, either as a franchisor or franchisee, has many legal implications. The documentation, including the franchise agreement and the disclosure documents (regulated by the Federal Trade Commision). Whether starting a franchise or buying into one, talk to a franchise attorney about these important documents.

Trademark rights continue as long as the owner continues to use it consistently to identify goods or services. A trademark owner can lose rights to the trademark through abandonment of the mark, non-use of the mark, or by granting naked licenses. Tally-Ho Inc. v. Coast Community College District, 889 F.2d 1018, Footnote 6 (11th Cir. 1989).

Getting our minds out of the gutter, "naked licenses" have nothing to do with nudity. Naked licenses are when a trademark owner licenses the use of a trademark without controlling the quality of the goods or services provided by the licensee. If consumers cannot expect consistency of goods or services associated with a trademark, in effect, consumers will cease to attribute those products with that mark. This is essentially the same as non-use of a trademark.

Quality control is vital in trademarks and licensing, which is why many franchises thrive. The intolerance for anomalies assures consumers that they can depend on the goods and services to be exactly as they expect. This high level of predictability is the secret to many franchises' success.

So trademark owners, don't be caught with your pants down when licensing the your rights. Ensure that your licensees are delivering the same quality of goods and services that you have originally attached to your trademark.

While monogamy is the prevailing standard accepted in our society when it comes to spouses and boyfriends or girlfriends, this is not necessarily so when it comes to a license for your patent or trademark.

When you offer the rights to use your patent or trademark, in exchange for fees and royalties, you are licensing those opportunities to another. That other party is called the licensee.

A monogamous license, more appropriately termed, an exclusive license, is where you have only one licensee. Typically, licensees agree to paying higher fees and royalties for the benefit of being the only ones who are allowed to benefit from the intellectual property. NBC was hugely successful last month, because they were the exclusive network to provide Olympic coverage.

There are times, however, where it benefits the patent or trademark owner to enter into a licensing agreement with as many licensees as possible. This is a non-exclusive license. Although a licensee will probably pay less in fees and royalties, the patent or trademark owner benefits from collecting this revenue from multiple licensees. Franchises are an excellent example of non-exclusive licenses to numerous franchisees for the use of trademarks, patents, and other proprietary assets.

I recently presented my seminar, "From Emblems to Empires: Using Trademarks to Promote, Protect, and Produce Business." The audience were the members of IMPACTJax, a young professionals' group that is part of the Jacksonville Regional Chamber of Commerce.

I discussed the importance of promoting a business name by building a brand name. The goodwill and reputation should then be protected through trademark or patent registration. Only then can defensive and offensive strategies have any teeth against potential infringers. Once a business achieves a level of success with those trademarked or patented assets, I explain why franchising the operation is among other options for expanding the business. In the alternative, for entrepreneurs interested in minimizing the risk of owning a business, I also discuss the advantages of buying a franchise.

Couldn't make it to the original presentation? Contact me to see when this seminar will be presented at a venue near you.

When you have a trade secret, nothing is more important than keeping it secret.

Arguably the most famous recipe in the restaurant industry, the Colonel's secret recipe with 11 herbs and spices is written on a piece of paper kept in a vault at their corporate offices. The yellowing sheet of notebook paper, handwritten by the Colonel himself, however, had to be transported this week to a temporary location for safekeeping while KFC beefed up security. Transportation security measures included bodyguards for the recipe and handcuffing the briefcase containing the recipe to KFC's president.

Much ado about nothing? Not at all. If the holders of a trade secret fail to take reasonable measures to maintain the secrecy, the value of their secret will be lost if the details are publicized.

I specifically discussed the KFC secret recipe in a recent article published in the Jacksonville Business Journal. The value of the KFC franchise, an internationally recognized business, comes from exclusive access to the recipe, which arrives prepared and ready to be used by the restaurant.

While registering your trademark is not mandatory, registration offers many advantages. The following only scratch the surface at the benefits of trademark registration:

It gives notice to the public and to your competitors that you claim ownership of the trademark. An owner of a registered trademark is presumed to be the rightful owner, unless proven otherwise.

If someone else tries to use the same or a similar trademark, you can then assert your ownership rights. This can be accomplished by sending a cease and desist letter or filing a claim for infringement.

You can allow others to use your trademark by licensing the rights to use your trademarks. You can control the way your trademark is used: for particular purposes, in certain places, or for a given length of time. This strategy is fundamental in business growth, business development, and franchising.

Registration with the U.S. Patent & Trademark Office provides a basis for you to apply for trademark registration in other countries. On a related note, you can prevent infringing foreign goods from being imported.

Pizza has dominated franchise offerings for many years. But 2010 will see some interesting new options for aspiring business owners. A recent article on the Small Business Trends blog pointed out some of the hot new franchises to watch out for in 2010.

For starters, the retirement of the baby boomers is driving the emergence of franchise opportunities that target older Americans. Some examples are CruiseOne, Club 50 Fitness Centers, Golf, Etc., and AmRamp, a company that sells, installs and maintains mobility ramps on private homes. The senior trend continues, with medical care and senior care facility franchises on the rise. Examples include Comfort Keepers, HomeInstead, HomeHelpers, Brightstar Healthcare, and Interim HealthCare.

Of course, food franchises are still popular. Topping the list for 2010 are Five Guys Burgers And Fries, Mexican eateries such as Qdoba Mexican Grill and Panchero's Mexican Grill, and a resurgence of frozen yogurt stores including a freshened up TCBY concept, SpoonMe, Yogen Fruz, Red Mango, Pinkberry, and Tasti D-Lite.

Other sectors that show promise are supplemental education facilities, green businesses and home-based businesses. For those that want to take the plunge, the availability of small business loans should be improving by the second half of 2010. Find out more franchise trends for 2010 at The Top Franchise Trends For 2010.

If you are considering a franchise opportunity, be sure to get all the facts and contact our firm for expert legal counsel.

In Jacksonville and northeast Florida we have just about all of them—McDonald's, Starbucks, and Dunkin Donuts; I am talking about the major franchises in the growing business of selling specialty coffee drinks. Recently, I posted a blog on succeeding in difficult economic times by finding a niche (Lucrative Niches +Established Marketplaces =Better Chances for Franchise Success). In that blog I explained that one way to be successful in a tough economy is by finding a niche that separates your company from the other businesses in the same market.

In this blog I would like to show you how the few franchisors I already listed, along with Tim Hortons and Caribou Coffee, a couple of the other major players in the specialty coffee market (neither of which have locations in Jacksonville), use their niches in the coffee and food chain restaurant business to compete. Here is a brief explanation of what helps each of them succeed in garnering a portion of the market share.

McDonald's, the largest franchisor, uses its buying power to provide the product at a slightly cheaper price and sells it along with its wide array of breakfast and burger meals.

Starbucks is probably the originator of the specialty coffee boom, so it can rely on the fact that it was the first in the market and that it is primarily a high-end coffee business.

Dunkin Donuts combines its primary product, donuts, with coffee to reach its particular market, and prior to Tim Horton's entering the marketplace, Dunkin Donuts, was the only one of these businesses offering its customers a wide array of donuts. Dunkin Donuts has recently added breakfast sandwiches in order to compete with McDonald's and Tim Hortons.

Tim Hortons, like Dunkin Donuts, sells a wide variety of donuts, but it also sells breakfast sandwiches and other foods, including soups and lunch sandwiches.

Caribou Coffee, the only other primarily high-end coffee focused chain besides Starbucks, competes by selecting smaller unexploited markets to locate its stores, avoiding direct competition with Starbucks.

Whatever your business is, you can still find a way to compete in a crowded market by finding your niche. Drop me an e-mail and let me know what you think. As always, I look forward to hearing from you