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.
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