Franchise Law Overview

Franchise law applies to franchisors like McDonald's ®, who allow you to buy and operate a business using the franchise trademarks, name, and business methods. In return, you, the franchisee, get the name recognition value and reputation of the franchisor. The Federal Trade Commission (FTC) requires franchisors to provide prospective franchisees with a detailed disclosure document. For instance, they must state their royalty rates, average startup costs, and how many franchisees are successful.

Consult with an attorney who specializes in franchise law before signing a franchise agreement or instigating a lawsuit in this area. If you suspect fraud, you can also contact the FTC to file a complaint.