Who Will Be The Franchisor?
The simplest corporate structure for a franchise system is to have the franchisor own the system trademarks and all non-franchised units. However, tax and liability issues may dictate the separation of these assets and functions among different corporations. For example, when the franchise expansion option is chosen after a business has been operating successfully for many years and has developed a viable network of corporate units, it may be wise to incorporate a new corporation to establish the franchise arm of the business. The new corporation would be licensed to grant sub-licenses in the trademarks and the system know-how, thus protecting the original business, and its trademarks and goodwill, in the event that the franchise expansion failed. This structure calls for a number of drafting changes to the standard “boiler plate”. The Preambles The preamble clauses in the franchise agreements of established franchisors most often state that the franchisor has established a unique meth
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- Who Will Be The Franchisor?
