A franchise is a legal and commercial relationship between the owner of a trademark and someone who seeks to use that identification in business activities. For example, Wendy's restaurants all share the same branding and similar menu items, but they're individually owned by franchisees.

Common terms in a franchise relationship are:

Franchise Disclosures: state laws that govern the disclosures franchisors must make to prospective franchisees. These are items such as average profit, operating costs, upfront capital expenditures, etc.

Royalties: the share of profit that the franchisee must pay to the franchisor.

If you are looking to enter into a franchise agreement, be sure to consult an attorney so they can review the master agreement and the franchise disclosure document for legalese, so that your rights are protected.

Changes may occur in this area of law. The information provided is brought to you as a public service, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or substitute for the advice of a lawyer.

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