LAW OFFICE OF TODD B. NURICK
Franchise Law
Business counsel for franchisors and franchisees
In a franchise, the disclosure document and the franchise agreement set the fees, the territory, the operating rules and what happens when the relationship ends. Those terms are hard to change once the agreement is signed.
I have represented franchisors, including drafting their franchise disclosure documents, and I have represented franchisees. Franchise work is part of my Business Law practice, and it draws on the same contract, entity and transaction work I do for companies and their owners.
For Franchisors
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Franchise disclosure documents. Preparing the franchise disclosure document (FDD) required by the FTC Franchise Rule, and updating it as the business changes.
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Franchise agreements. Drafting the franchise agreement and related contracts so that they match the disclosure document and the way the system actually operates.
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Is it a franchise? Reviewing whether a proposed license, dealership or distribution arrangement may meet the federal or New York definition of a franchise before it is offered.
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Structure and governance. Setting up the company that will offer franchises and keeping its ownership, records and decision-making in order.
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New York registration. Reviewing whether New York's franchise registration requirements apply before a franchise is offered or sold in or from New York.
For Franchisees
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Reviewing the FDD. Going through the disclosure document with you before you commit, including the fees, the estimated initial investment, the territory and what the franchisor is and is not required to provide.
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Reviewing the franchise agreement. Explaining what the agreement requires of you, where the risks are and which terms may be open to discussion.
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Renewal, transfer and exit. Explaining what happens at renewal, if you want to sell the business, or if the relationship ends, including any noncompete that applies afterward.
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Your entity and related agreements. Setting up the company that will own the franchise and reviewing the personal guaranty, lease and other contracts that often come with it.
The Rules That Apply
At the federal level, franchise sales are governed by the Federal Trade Commission's Franchise Rule, 16 C.F.R. Part 436. Unless an exemption applies, a franchisor must give a prospective franchisee its disclosure document at least 14 calendar days before the franchisee signs a binding agreement with, or makes any payment to, the franchisor or an affiliate in connection with the sale. The disclosure document covers 23 required items, including fees, the estimated initial investment, litigation history, territory and financial statements.
In Pennsylvania, the FTC Franchise Rule sets the main disclosure requirements for franchise sales. New York is different. Its Franchise Sales Act, Article 33 of the General Business Law, generally requires a franchisor to register its offering with the New York Attorney General's office before offering or selling a franchise in or from New York, unless an exemption applies.
Whether a particular arrangement is a franchise, and which rules apply to it, depends on the facts.
Why a Business Lawyer
Most of the legal work in franchising is business work: contracts, entities, fees and ownership. I have been admitted to practice in Pennsylvania since 1996 and in New York since 2010, and I advise companies and their owners on those issues. Because I have represented both franchisors and franchisees, I know how these documents read from each side.
Based in the Philadelphia Area
My office is in Plymouth Meeting, in Montgomery County, and I work with franchisors and franchisees throughout the Philadelphia area and the surrounding counties. I'm admitted to practice in Pennsylvania and New York.
If you are preparing to offer franchises, or you have received a franchise disclosure document and would like it reviewed before you sign, call 610.238.9000 or use the contact form to arrange a consultation.