TO LICENSE OR FRANCHISE . . . THAT IS THE QUESTION.

Understanding the Differences between Licensing and Franchising . . . that is the challenge.

If it looks like a duck, walks like a duck, quacks like a duck, it’s a duck.  Similarly, if a deal is structured like a franchise and/or operates like a franchise, it’s likely a “franchise,” and if so, franchise laws must be complied with, regardless of what you call the deal (i.e., even if you choose to call it a “license,” not a “franchise”).  Misrepresenting the deal, misunderstanding the deal and failure to comply with necessary laws, could result in civil and criminal penalties for persons and businesses involved.

Business Acquisition Checklist for Buying or Selling a Business

The following is a general checklist of issues that typically should be addressed in a Business Acquisition Agreement, when buying or selling a business.

New Business Checklist

1. Gather Your Team of Professionals (Legal, Tax/CPA, Bank Rep., Insurance agent)
2. Confirm in writing the promises made by each Participant (roles, duties, responsibilities and any limitations, expectations and assumptions made).
3. Register Trademark, Copyright and Patents .
4. Learn the differences between LLC’s and Corporation and S-Corp.
5. Obtain By-Laws, Shareholder Agreements & Operating Agreement.
6. Obtain Fed ID for Business.
7. Open separate Bank Accounts for Business.
8. Create a realistic budget and learn about Financing Options.
9. Learn about and Obtain Applicable Business Certificates, Licenses & Permits.
10. Understand the Letter of Intent, Lease and Guaranty, before you sign.
11. Understand Licensing Intellectual Property (trademarks, designs, patents, content, etc.).
12. Learn about Employer Posters Required by law.
13. Learn about and obtain appropriate insurance coverage.
14. Register with the State for Sales and Use tax if applicable.
15. Establish Payroll System.
16. Obtain Protection with Terms of Use, Terms of Sales, Privacy Policy, IP Notices.
17. Comply with merchant credit card transaction requirements.
18. Obtain Protection with Agreements, such as:
a. Website & Logo Designer Agreements (like real Estate, e.g., you don’t own your logo or website design, unless a proper signed writing assigns ownership of it to you).
b. Employment Agreements: Non-competes, Assignment of Rights, etc.
c. Executive Compensation Agreements: Profit Sharing, etc.
d. Independent Contractors (learn the difference between contractors and employees)
e. Confidentiality Agreements
f. Strategic Marketing Alliance Agreements
g. Supplier- Buyer Agreements
h. Manufacturer – Distributor and Broker Agreements (Non-circumvention, etc.)