June 26, 2022

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License Agreement in the United States

In the United States, a franchise agreement is often used to promote and consolidate one’s brand.

We note that this demand is certainly closely linked to the breadth of the region and the consequent difficulties in having a wider presence with sales points or own realities. Before Covid-19 there were about 2,500 ownership organizations in the United States that manage about 800,000 owners in 300 different sectors. These proprietary businesses have created 7 million 600,000 jobs, approximately US $ 674 billion in terms of production value and 2.5% of GDP.

Unfortunately, due to Govt, in August 2020, about 32,700 licensed businesses were closed, of which 10,875 remained firm. The owner market has lost 1 million 400,000 jobs due to the epidemic, 40% of which are permanent.

Recovery after infection

The ownership system is known for its regression and innovation, but you need to understand how quickly it can recover after an infection is over.

Ten major franchise chains around the world are located in the United States (McDonald’s, Pizza Hut, KFC, Burger King, …): they have grown to over $ 300 billion in annual sales.

The interests of licensed brands in the United States are represented International Owners Association, Based in Washington, D.C., is the largest and oldest ownership organization in the world.

Differences in Uniqueness and Ownership Agreement

Despite having common characteristics everywhere, the rights agreement in the United States sometimes presents peculiarities and differences between one state and another, so it is a good recommendation to carry out a specific and pre-verification. Rules. It is in practice in the region where it wants to operate.

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We have said that the regulation of the franchise agreement is not the same and varies from state to state and sometimes it is not.

At the federal level, the organization that handles ownership Federal Trade Commission And the relevant law is the FTC Rule of ownership 2007, “Disclosure requirements and restrictions on ownership ”. In general, these are the rules for the protection of the owner.

Open a Francis Network in the United States

The choice to open a franchising network, especially in the United States, should be preceded by an accurate feasibility study, which, among other things, takes into account the characteristics of the market and, of course, the habits of potential buyers. Goods or services, labor regulations and tax features, the amount of investment required, it is certainly not small.

First, the owner’s trademark is registered and valid in the United States.

The FTC requires that you submit in advance the Franchise Disclosure Document (FDD) that meets the requirements of applicable law and FTC franchise rules.

15 states FDD and 7 other states must register the owner to complete a form before granting or selling ownership.

Disclosure and registration obligations are intended to protect owners and potential owners.

The owner can meet the requirements of the supply chain, thereby complying with the rules relating to individual products, including the possibility of guaranteeing all activities related to the goods delivered from production to import to the United States, including customs and logistics costs.

Characteristic elements of this type of contract, as always:

  • Trademark offer by the Francis in support of the owner for the sale of goods or services;
  • A payment Entrance fee In favor of the owner;
  • Controlling the owner’s activity by the owner in order to achieve a common interest.
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If the owner of the trademark is a foreign object, it is better for him to establish a company or appoint a legal entity in the territory with the task of acting as the primary owner.

In this case, the primary owner has the task of establishing sub-owner agreements with the sub-owners locally.

In this case, the first agreement between subjects of different countries will be governed by the rules of private international law and the second by local rules.

If the Italian owner wants to act directly, he can do so, perhaps using a Area Representative Local, to assist in opening the store, to perform certain tasks, and in the early stages.

Sometimes image is used instead dell’area developer owner Regional exclusivity is given for opening sales points for goods or services.

It is useful to remember that accuracy in drawing up contract terms is always very important for both the correct merit of the contract and the fees to be borne by the parties so as to avoid disputes as much as possible. Explanatory position.