Living up to franchise licensing that is in compliance to state and local franchise laws is not optional.

Franchise licensing is a formal way of saying that to be in a franchise relationship, everybody has to play by the rules.  The rules that are the “big brother” over the franchise world are set both by the federal and state governments. Just as nobody wants to get in hot water with the IRS, to fail to live up to franchise law could mean that your franchise licensing will become a fond but distant memory.  If that doesn’t light a fire under you to live by the rules, nothing will.

The priority to be very fussy about maintaining a clean nose with the franchise licensing big dogs must be just as high for the franchising company as it is for the franchisor.  When you set out to franchise your business, the idea is not to just have one or two franchisors out there.  The big names in franchising like Starbucks or McDonalds have hundreds if not thousands of franchisors. Every one of those franchise owners but live up to the terms of franchise licensing both at the federal and state level.

You cannot run around behind that many franchise owners to know that they will not put your franchise licensing at risk.  The heart of how a franchisee manages the problem lies in those franchise agreements that get so much discussion as you enter into a franchise relationship with a new franchisor.

You can put some teeth into those franchise agreements. You can put as much detail as you need in those franchise documents to feel you have covered your bases to spell out to a new franchise owner exactly what is expected of them to protect their franchise licensing and yours as well.  In fact, it is smart to customize those franchise licenses by state so that you cover any quirks in franchise licensing laws that some states may throw into the mix.

Checking up on the other guy.

As a potential franchise owner, the idea of worrying whether the company offering a franchise to you is in compliance with the laws covering franchise licensing may never have worried you. You should let it worry you. The last thing you need is to sink your life savings into buying a franchise only to find that they are in legal hot water for not living up to the regulations covering their franchise licensing.

You can check up on the other guy before you even consider signing a franchise agreement with that business.  You can do some snooping around to find out how long they have been in the franchising game and if they have run afoul of franchise licensing legalities so far.  If you smell trouble during that background check, run!

In addition, be sure that the franchise agreements and other pertinent binding franchise documents are just as tough on the franchisee as they are on you about keeping their nose clean with the franchise licensing authorities. If the language of those documents is written to protect you in case there is a problem with franchise licensing at the mother ship, you will be glad you took the time to protect yourself going in.