What's a Franchise?

To bring you these dynamic and timely posts I read an encyclopedic amount of info ... Not. Really I just use Google Alerts and then make up the rest.

But it struck me when reviewing Google Alerts last Friday why people may be confused about what a franchise is -- here are the headlines (not making up this part):

• Friday the 13th Part III: How an '80s horror franchise bet it all on 3-D
• Kyrie carries Cavs with franchise-record 57-point effort
• How a Love of Nature Became a Thriving Franchise 
• Frozen 2 the Tip of Disney's Film Franchise Iceberg
• CBS '48 Hours' franchise on lookout for cold cases
• Is Robert Pattinson 'Underrated'? David Cronenberg SLAMS 'Twilight' Franchise 'Silliness'

The term is so widely used in various contexts that it is no wonder entrepreneurs are confused. (Just check the Franchise News feed to the right on this site powered by Google Alerts) However, buyers and sellers of business ventures do need to distinguish between legally-regulated "franchises" (and "business opportunity plans") AND the Twilight Franchise. 

As I mentioned in earlier posts (Let's Just Sell Licenses!): In today’s “start your own business”-“business opportunity”-“franchise”-“license” “distribution”-world, it is very difficult to offer a program that, legally speaking, is not considered a “franchise.” Otherwise you are likely operating from inside the Twilight Franchise or perhaps the Twilight Zone.

We will not attempt to explore here all the possible scenarios or definitions of “franchises” and “business opportunities” but suffice it to say that if (1) you charge an upfront fee, (2) offer any type of assistance (educational, marketing, accounts, equipment/inventory acquisition) in helping someone start a new business that you happen know a little something about and, (3) simply tell them that there is a market for this stuff or make any other representation that generally persuades people to follow your successful lead – you may have just sold a regulated business venture or franchise without the proper disclosure information. 

So tread lightly - whether you are buying or selling a business concept.

Jim Meaney is a lawyer with the Zaino Law Group in Columbus, Ohio. Jim has represented franchisors and franchisees for 30 years. Jim is a co-author of “Starting a Franchise System: Practical Considerations, Planning and Development” and author of How to Buy a Franchise. 

Visit www.fddlawyer.com or www.ohiofranchiselawyer.com for more information or contact Jim directly at 614.975.9876 or jmeaney@zainolawgroup.com