IFA:
Franchise sales activity that complies with federal and state laws and administrative regulations governing such activity rewards the franchisor and its personnel with peace of mind.
The franchisor who satisfies its disclosure obligations never has to face the potential havoc of alleged violations. Although the success of the franchisee is not assured, the success of the franchise sale is not in doubt because of a disclosure violation. Conversely, a franchisor who ignores or fails to execute properly its disclosure obligations can spend up to four years wondering if the other shoe will drop.
Does the franchisee have an opportunity to assert a “get out of jail free†card when buyer’s remorse overcomes the franchisor’s efforts to create and sustain a satisfied customer? Will the regulators who get wind of the problem assert their law enforcement powers, or just make life difficult for the franchisor in its effort to register and sell franchises? Can a franchisee sue the franchisor, even if the statute or regulation does not give an express right to bring an action for violation?
Franchise sales law compliance distills to a few simple precepts…
