A franchise is an agreement or contract between two or more persons by which the franchisor, for a fee, gives the franchisee the right to engage in the business of offering or distributing goods or services using the franchisor’s trade name, trademark, service mark, logotype, advertising, or other commercial symbol. Both the franchisor and the franchisee must have a community of interest in the marketing of the goods or services.
Franchising is a method of distributing and marketing goods or services. It is not a separate form of business organization. The franchisor’s business and the franchisee’s business each will take one of the forms of organization previously discussed.
Franchises are regulated in Minnesota by the Department of Commerce, and anyone contemplating the sale of a franchise should check with that office for registration and filing requirements and exemptions that may apply. Regulatory requirements applicable to franchises are discussed further in the section of this Guide on Franchise Registration.
The next several posts will cover:
- Filing franchise documents with the Secretary of State
- Franchise regulatory considerations
- Franchise registration