A license agreement drafted to disguise a franchise agreement may skirt the laws of the Federal Trade Commission briefly, but ultimately the facts will challenge its validity down the road.
Selling a disguised franchise as a “license” can be the most expensive mistake a company ever makes. These companies may start out selling “licenses” heeded from misguided advice in a worthless attempt to save money. One of two avenues exists from here—litigation arising from selling an illegal franchise, or obtaining competent advice and discovering the realization of selling illegal franchises. Government agencies may require full rescission rights to all persons that have been duped into these “licenses,” thus putting owners into and out of business for free plus having to refund all the money that was paid.
What is franchising? | What Franchising Is Not | Is This Contract A Franchise?
