If you plan to start a franchise in New York, it is important that you have a grasp of franchise relationship laws. To understand these laws, it may help to know a little more about their history. If you still have questions about franchise relationship laws, or how they will affect your franchise in New York, you can seek the advice of a New York franchise lawyer. The History of Franchise Laws
When early franchise registration and relationship laws were established in the 1970s, they were meant to prevent widespread abuses throughout the franchise landscape. The primary abuses that franchise laws were meant to prevent include:
Unjust terminations - Laws regarding unjust terminations were established to prevent the franchisor from terminating the franchise relationship, either by contract, economic means or other pressure, which would deprive the franchisee of their investment and returns.
The denial of renewal rights- Typically, franchise agreements were short term, with no opportunity for renewal. This would allow the franchisor to capture the benefits of the business that the franchisee had developed.
The denial of the right to assign- Franchisors would prohibit franchisees from transferring their interest in a franchise to a bona fide purchaser, or to a qualified family member, which would deprive the franchisee of the opportunity to liquidate the equity of the franchised business.
Other abuses - Franchise laws also addressed abuses such as refusal to grant territorial rights and protection, restriction of the right of free association among franchisees, discrimination among franchisees and unreasonable standards of performance.
To regulate and prevent those types of abuses, federal and state laws were adopted, and the Federal Trade Commission (FTC) adopted the FTC rule in 1979. The FTC rule mandates specific pre-sale disclosures when starting a franchise in New York. It's important to note that there are no franchise rules at the federal level regarding the termination, renewal or assignment of franchises.
A New York franchise lawyer can help you to understand the federal FTC rule, as well as other U.S. franchise laws. Furthermore, a New York franchise lawyer can assist you during the disclosure process to make sure that all of the necessary information has been properly provided. Continue to Next Page >>
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