Franchise laws are the legal issues between franchisee and franchisor, a buyer seller relationship case.
The Franchise laws not only discuss the relationship between the franchisor and the franchisee but the franchisee’s relationship with its employees and other third party elements.
In a franchise system, a person may buy the right to sell a product of a licensed company or franchisor. This is not similar to other resale systems because the seller only sells exclusively the franchise services and trademarks under the franchisor’s brand name. Franchise law is the body of law developed to regulate the relationship between the franchisee and the franchisor.
The regulator of franchise laws is the Federal Trade Commission or FTC. Each region may implement their own laws and regulations regarding the legal relationship between franchisor and franchisee in their respective areas. The tort system can also apply ruling and decisions that directly affect the franchising system.
Since there are different laws applicable in a country or state, franchise law depends on the interpretation of that particular state or country. A franchise law may be considered valid and must be enforced in its state of origin but it can be considered illegal and must not be practiced in a neighboring region.
Franchise law is very distinct due to the unique relationship of franchisor and franchisee. Though franchise law has evolved and may be practiced in numerous areas, it has to be in conjunction with the existing laws of that particular area. Other legal areas that are related to franchise law are the business law, contract law, trademark law, collections law, international law, employment law, administrative law and customs.
It is important to heed the legal advice of a franchise lawyer before proceeding into the franchising business. Every time you enter into dealings with franchisors, you need to have the advice of a franchise lawyer and if necessary, they should be present whenever you are talking to the franchisors. It is better to get a lawyer specializing in this particular branch than an ordinary lawyer who has to catch up in recent franchise legislation.