Chicago Franchise Lawyer
Choosing a Lawyer For Your FDD and Franchise Agreement
Starting or owning a franchisee in Chicago is an exciting endeavor that allows business-minded individuals to grow companies using established processes, known products, and recognizable brand names.
Franchises in the United States must comply with the Federal Trade Commission (FTC)’s requirements for disclosures and documents. In addition, some states have additional registration documents. In Illinois, franchisors must register their franchises with the Franchise Bureau in the Office of the Attorney General.
Franchisors need to otherwise comply with creating FTC-compliant Franchise Disclosure Documents (FDDs) and franchise agreements. Illinois Franchisors must all allow a fourteen-day “cooling off period” for potential franchisees after providing the prospective franchisee the FDD and franchise agreement before accepting any non-refundable franchise fees or binding the franchisee.
Franchisees can take advantage of established trademarks, specialized knowledge, and proven business practices instead of starting from scratch. While this is exciting, there’s a lot that can go wrong, so it’s important work with a knowledgeable business lawyer who understands the ins and outs of franchise opportunities.
Motiva Business Law helps franchisees stay informed about their rights and responsibilities, ensuring they get the most out of their investment. We assist with the creation and interpretation of the Franchise Disclosure Document (FDD) and franchise agreement, helping you make well-informed decisions before committing significant funds. Our firm also supports the development of franchise systems to help you realize your vision and grow your business. We are committed to hearing you and making sure your business has the best chance to succeed.
We serve businesses in Oak Brook, Burr Ridge, Naperville, Hinsdale, Lombard, Addison, Downers Grove, Oak Park, Darien, Chicago, Lisle, Westmont, Willowbrook, Clarendon Hills, and the Chicagoland Area.
Motiva Business Law Offers
- Franchise Formation
- Franchise Agreement Reviews
- Legal Counsel Related to Franchise Matters
- Franchise Disclosure Documents (FDDs)
- Sub-Franchisor Agreements
- Area Development Agreements
- Multi-Unit Franchisees
- Franchise Acquisition
When Do I need a Franchise Attorney in Illinois?
The ideal moment to involve our franchise lawyers is when you receive the FDD (Franchise Disclosure Document). Our firm prefers to start early in the process, allowing us ample time to thoroughly review and discuss the documents before any deadlines from the franchisor.
Once we start working with you, we can examine documents like:
- Franchise Agreements
- Franchise Disclosure Documents (FDD)
- Multi-Unit Franchise Agreements
- Area Development Franchise Agreements
- Sub-Franchisor Agreements
Contrary to popular belief, franchise agreements can often be negotiated. Our firm helps you grasp the legal terminology and franchise regulations. After assessing your agreements, we can assist in negotiating terms that better align with your long-term objectives as a franchisee. You, as a franchisee, have many legal rights. We ensure that the franchisor meets its obligations to you. We are here to support you as your advocate.
Multi-Unit Franchise Lawyers in Illinois
Managing a single franchise can be challenging, but overseeing multiple franchises requires not only business acumen but also expert legal support. At Motiva Business Law, we specialize in assisting multi-unit franchise owners in Illinois and Florida. Our team is dedicated to helping you make informed legal decisions, review essential agreements, and provide the peace of mind needed to focus on your business. We recognize the ambitious goals of multi-unit franchise owners and aim to ensure your vision is built on a solid legal foundation, so you can continue to grow and expand.
are there any experienced franchisee exemptions?
Experienced franchisees can benefit from specific exemptions related to franchisor disclosure requirements. One such exemption applies to substantial franchisees with a net worth of at least $5 million (adjusted to $6,165,000 as of July 1, 2020, by the FTC for inflation) and who have been in business for a minimum of 5 years.
Another exemption is available for substantial investments. This is applicable when the franchisor and potential franchisee have comparable bargaining power and business expertise. In Illinois, this exemption applies if the initial investment is $1 million or more. Additionally, franchisors must provide specific information to the Attorney General to qualify for this exemption.
For any questions regarding these exemptions, contact Motiva Business Law to schedule a consultation with our franchise attorney.
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Illinois Franchise Lawyer FAQ
When you are negotiating with a franchisor, your rights as a franchisee include the franchisor being required to provide you with certain disclosures called a “Franchise Disclosure Document” (FDD) and a Franchise Agreement. Franchisees also have at least 14 days to review the FDD before being expected to sign a Franchise Agreement. Once you become a franchisee, your rights include:
- Work under the franchisor’s brand and trademarks.
- Use the franchisor’s operational systems and manuals.
- Receive training and ongoing support.
- Operate in an exclusive territory.
- Benefit from the company’s marketing and advertising.
By franchising your brand, you will take the role of the franchisor, whereby you create a business that others can copy, but without becoming investors in your actual business. To become a franchisor, there are certain requirements such as creating an FDD and clear written business model, train franchisees, providing support, and collecting payments.
On the other side, as a franchisee, you will be required to make initial and ongoing payments to be able to operate under the franchisor’s brand and access its business model. You will also be required to follow the franchisor’s business model and requirements so the franchisor’s business and branding are consistent in all locations.
Technically, franchisees do “own” their franchisee business because the franchisee operates under its own corporation or LLC. However, even though they operate independently and own the assets they purchased, such as equipment and furniture, they do not own the overall brand. Franchisees also cannot deviate from the franchisor’s business model without the franchisor’s consent. However, a franchisee can sell his or her business with the franchisor’s consent.
A franchisee works under someone else’s brand, has to adhere to specific procedures, and does not own the entire revenue of assets of their business.
On the other hand, an independent owner works with their own brand, has full decision-making flexibility, and owns the whole business’s earnings and assets.
The duration of a franchise agreement can vary, but most agreements have an initial term of 5 to 10 years, with options to renew for additional terms. It is essential to carefully review the term provisions in the franchise agreement before signing.
Yes, a franchise involves the parties entering a franchise agreement, which is a legally binding contract in which the franchisor, who owns the brand and business model, grants the right to a franchisee to use its business system trademarks for a specific duration in exchange for paying a fee and ongoing royalties.
The terms of a franchise agreement will vary depending on the franchisor, but they will define the following elements:
Fees: This includes the initial franchise fee and ongoing royalties and other fees such as marketing fees.
Territory: The area where the franchisee has the exclusive right to operate.
Operations: Guidelines and standards for the operation of the franchise.
Intellectual property: The use of trademarks and intellectual property.
Support: The extent to which the franchisor will assist the franchisee.