4

Charles N. Internicola is a business and franchise lawyer who is also an entrepreneur and franchisor. Charles “gets and understands” what it means to be a business owner. With that understanding, he has developed unique programs involving the representation of closely-held companies, franchisors, distributors and individual entrepreneurs in business transactions, franchising, licensing, and business litigation, including protection of intellectual property and partnership disputes.

The Business and Franchise Law Report is a publication of the Charles N. Internicola Law Firm, P.C., and is intended to educate the general public about business law issues. It is not intended to be legal advice. The information in this newsletter may be freely copied and distributed as long as the newsletter is copied in its entirety. newsletter design and layout by zinegraphics.com

ABOUT CHARLES N. INTERNICOLA, ESQ.

email cni@BusinessandFranchiseLaw.com | web www.BusinessandFranchiseLaw.com | tel 800.976.4909

Sir Thomas Watson

To be successful, you have to have your

heart in your business, and your business in

your heart.”

IN THIS ISSUE

ARE YOU READY FOR BUSINESS EXPANSION?

volume 1 | issue 6

1000 South Avenue | Suite 104Staten Island, NY 10314

1.800.976.4904www.BusinessandFranchiseLaw.com

BUSINESS LAW There are several options for business expansion.See which is best for you. PAGE 2

NEWS Teleconference: What Are The “Tricks” and “Treats” of Franchising? An annual event you dont want to miss! PAGE 2

INTERSECTION OF BUSINESS AND LAW Are You Ready For Business Expansion? PAGE 1

BUSINESS SPOTLIGHT What is “Franchise Univer-sity”? Critical information before you buy a franchise. PAGE 4

Sounds like a simple question but, chances are, you

already know that answering this question can get

complex. Keep in mind that I am not asking you “if

you would like to expand your business” (a simple

question that 99.9% of the time will be answered with

a simple yes) but, rather, are you “ready” to expand?

That is, have you identified the necessary steps to

expand your business and are you taking action?

THE PROBLEM: GETTING STARTED

The problem that many of us struggle with

on the expansion front is getting started. Sure, we are

all busy, focus on our work and work hard in delivering

products or services. The problem in just doing this is—

as author Michael Gerber articulated so well—that we

end up working “in our businesses” instead of “on our

businesses”. For example, as a business and franchise

law firm, many times (I am a lawyer after all) I spend the

vast majority of my time in the courtroom, negotiating

transactions or providing legal services. This is certainly

a good thing (since I enjoy what I do) but to truly “work

on my business” I need to set aside time and effort to

work on the business of the law firm. That is, reviewing

our client communications, reviewing the programs

that we offer, developing value based billing systems

and ensuring that our internal systems are focused on

delivering excellent and valuable services for our clients.

THE NEXT PROBLEM: STAYING

STARTED Once you get started you

need to keep going and ensure that you continue to

focus “on your business”. At our law firm there are many

business systems that we have developed to monitor

the quality of our work, the satisfaction of our customers

and attract only those new clients who will benefit from

our specialized programs. But like you, I sometimes lose

WHAT IS “FRANCHISEE UNIVERSITY”?The “Buying a Franchise University Series of Videos”

was created to educate and inform individuals who are

interested in entrepreneurship and buying a franchise. This

series gives access to critical information that you need to

know before you buy a franchise including practical and

real world insights that you can use and benefit from.

BUSINESS SPOTLIGHT

Visit “Franchisee University” at www.BuyingAFranchiseUniversity.com

QUOTE OF THE MONTH

INTERSECTION OF BUSINESS AND LAW

—continued on page 3

2 3

INTERSECTION OF BUSINESS AND LAW

The Business and Franchise Law Report | Volume 1 Issue6 www.BusinessandFranchiseLaw.com

—continued from page 1

When it comes to business expansion, there are many legal options and potential courses of action. For the successful business owner and entrepreneur, some “expansion options” that you need to be aware of or, at least, reminded of, include:

BUSINESS EXPANSION OPTIONS

■ Control – The degree of control that you will possess over the distributors methods of operation and their policies regarding customer purchases.

■ Private Label – Whether or not product will be marked and sold by your distributors under a brand that you control or a “private label” / brand controlled by your distributor or a third party.

■ State Law – Whether or not the state in which you operate regulates distribution relationships. Many do and you need to account for state regulation.

LICENSE RELATIONSHIPS – License relationships, like

distribution relationships, are quite common and represent a

primary vehicle for business expansion. License relationships

typically involve the production of products and/or delivery of

services under the trademark or trade name owned by a third-

party. If you are the party controlling the mark and granting

the license, then you are the “licensor” and if you are the

party receiving the right to utilize the trademark then you are

the “licensee”. If you are a manufacturer or product importer

then, chances are, your private label product for third parties

(including national retailers that may be purchasing product

from you) and in producing private label product you are

relying on a limited license granted to you.

Issues to Consider before Entering into a License Relationship:

Well, to save some space, I can tell you

that the “category” of issues are the

same ones that I outlined above when

talking about distribution relationships.

Also, however, you must proceed

with caution and ensure that the your

license relationship does not create a

franchise relationship (see below)

FRANCHISE RELATIONSHIPS

Franchising combines elements found

in both distribution relationships and

license relationships. In many ways,

franchising can be viewed as a “super

license”. When it comes to franchise

relationships, the franchisor (the party

that has an established trade name,

business systems, products and/or

services) grants to a franchisee the

“license” and right to duplicate the

franchisors business model, utilize

the franchisor’s trade name and to

gain access to the products sold by

the franchisor and/or the services

that they provide. When it comes

to understanding the difference

between franchising and licensing, in

a franchise relationship, the franchisor

will, from a contractual standpoint,

possess significant “control” over the

franchisee.

In addition to the issues raised in the distribution section (above), you should consider:

■ State and Federal Law – Before

entering into a franchise relationship

(i.e., before you sell a franchise)

you must satisfy federal and state

franchise laws. Without going into

too much detail, prior to offering

or selling a franchise you must

prepare a Franchise Disclosure

Document (think of it like a offering

prospectus that describes various

legal and business factors

associated with the franchised

business) (the “FDD”). The FDD

must be registered with certain

state agencies and delivered to

a prospective franchisee before

offering or selling a franchise.

Sounds complex but franchising

your business is a goal that

can be readily achieved. Also

once you satisfy the franchise

regulations, you will be afforded

a lawyer of “legal” protection not

available in license or distribution

relationships.

■ Franchise Flexibility – When

evaluating franchising as a

business expansion model, you

should understand that franchising

is flexible and can be used to

achieve local, regional and national

expansion. Many successful

franchisors have limited their

growth and business operations to

a geographic area or market while

others have focused on national

expansion.

FINAL NOTE: There are many

methods for expansion and the three

that I have mentioned are just a few

of your “legal options”. The reason

that I mention “legal” is because

many times businesses just expand

through a normal and organic process

involving business relationships

and “hand-shake agreements”

that avoid legal formalities. While I

am a big believer in relying on the

right people and the promises that

they make, when it comes to your

business there is too much at stake

and not formalizing your business

relationships is a mistake that you

must avoid at all costs.

BUSINESS LAW

focus and get lost in my business,

which is so easy to do. That is, I

focus exclusively on providing legal

services.

SO ARE YOU READY TO EXPAND YOUR BUSINESS?

Well the answer is yes if you are

taking action to (a) evaluate, monitor

and develop your business systems,

(b) you don’t get lost “in your

business” and you put together a

systematic plan to constantly and

continuously work on these business

systems (i.e., systems for attracting

new business, systems for employee

training; systems for monitoring

client satisfaction, and most

important, systems for ensuring

that you are delivering value to your

customers or clients) and constantly

improve them.

Slight confession, I have been

on trial for about a week and I

guess you can probably tell, I feel

somewhat guilty that I have not been

focused on the business systems of

our law firm. Trial went well though

and so did the outcome. But like

you, good service is not enough –

we each must deliver “value” to our

customers and this value requires

well executed business plans and

systems to ensure nothing falls

through the cracks.

TELECONFERENCE: WHAT ARE THE “TRICKS” AND “TREATS” OF FRANCHISING?

NEWS

Join our annual start-up franchisor teleconference on Wednesday, October 30 at 12:30 PM EST. During the call, we will discuss steps that successful business owners can take to expand their businesses through franchising. Submit a question or simply just listen in.

Registration is easy! Visit: www.FranchiseYourBusinessSeminar.com or call 800.976.4904. We look forward to hearing from you!

DISTRIBUTION RELATIONSHIPS – For product manufacturers

(including those many businesses that have their products

produced by factories overseas) and importers, distribution

relationships are critical and an excellent vehicle for expansion

and recruiting the resources and efforts and third party partners.

In the typical distribution relationship a contract is granted where

a third party is granted the right to distribute your products

within a certain market and subject to specified pricing criteria.

Distribution relationships occur, many times, out of business

necessity and present a primary expansion model.

Issues to Consider Before Entering into a Distribution Relationship:

■ Exclusivity – Whether or not the relationship will be exclusive to that particular distributor or whether or not you will be permitted to grant additional distribution rights to others.

■ Duration – How long the distribution relationship will last and what happens after the relationship is terminated.

■ Geographic Market – The geographic or internet based markets in which you will be granting the distributor rights.

■ Quotas – If the distribution relationship includes a form of exclusivity (i.e., a distributor is granted the exclusive rights to a certain geographic market).

■ Pricing – The prices that you will charge the distributor for product.

2 3

INTERSECTION OF BUSINESS AND LAW

The Business and Franchise Law Report | Volume 1 Issue6 www.BusinessandFranchiseLaw.com

—continued from page 1

When it comes to business expansion, there are many legal options and potential courses of action. For the successful business owner and entrepreneur, some “expansion options” that you need to be aware of or, at least, reminded of, include:

BUSINESS EXPANSION OPTIONS

■ Control – The degree of control that you will possess over the distributors methods of operation and their policies regarding customer purchases.

■ Private Label – Whether or not product will be marked and sold by your distributors under a brand that you control or a “private label” / brand controlled by your distributor or a third party.

■ State Law – Whether or not the state in which you operate regulates distribution relationships. Many do and you need to account for state regulation.

LICENSE RELATIONSHIPS – License relationships, like

distribution relationships, are quite common and represent a

primary vehicle for business expansion. License relationships

typically involve the production of products and/or delivery of

services under the trademark or trade name owned by a third-

party. If you are the party controlling the mark and granting

the license, then you are the “licensor” and if you are the

party receiving the right to utilize the trademark then you are

the “licensee”. If you are a manufacturer or product importer

then, chances are, your private label product for third parties

(including national retailers that may be purchasing product

from you) and in producing private label product you are

relying on a limited license granted to you.

Issues to Consider before Entering into a License Relationship:

Well, to save some space, I can tell you

that the “category” of issues are the

same ones that I outlined above when

talking about distribution relationships.

Also, however, you must proceed

with caution and ensure that the your

license relationship does not create a

franchise relationship (see below)

FRANCHISE RELATIONSHIPS

Franchising combines elements found

in both distribution relationships and

license relationships. In many ways,

franchising can be viewed as a “super

license”. When it comes to franchise

relationships, the franchisor (the party

that has an established trade name,

business systems, products and/or

services) grants to a franchisee the

“license” and right to duplicate the

franchisors business model, utilize

the franchisor’s trade name and to

gain access to the products sold by

the franchisor and/or the services

that they provide. When it comes

to understanding the difference

between franchising and licensing, in

a franchise relationship, the franchisor

will, from a contractual standpoint,

possess significant “control” over the

franchisee.

In addition to the issues raised in the distribution section (above), you should consider:

■ State and Federal Law – Before

entering into a franchise relationship

(i.e., before you sell a franchise)

you must satisfy federal and state

franchise laws. Without going into

too much detail, prior to offering

or selling a franchise you must

prepare a Franchise Disclosure

Document (think of it like a offering

prospectus that describes various

legal and business factors

associated with the franchised

business) (the “FDD”). The FDD

must be registered with certain

state agencies and delivered to

a prospective franchisee before

offering or selling a franchise.

Sounds complex but franchising

your business is a goal that

can be readily achieved. Also

once you satisfy the franchise

regulations, you will be afforded

a lawyer of “legal” protection not

available in license or distribution

relationships.

■ Franchise Flexibility – When

evaluating franchising as a

business expansion model, you

should understand that franchising

is flexible and can be used to

achieve local, regional and national

expansion. Many successful

franchisors have limited their

growth and business operations to

a geographic area or market while

others have focused on national

expansion.

FINAL NOTE: There are many

methods for expansion and the three

that I have mentioned are just a few

of your “legal options”. The reason

that I mention “legal” is because

many times businesses just expand

through a normal and organic process

involving business relationships

and “hand-shake agreements”

that avoid legal formalities. While I

am a big believer in relying on the

right people and the promises that

they make, when it comes to your

business there is too much at stake

and not formalizing your business

relationships is a mistake that you

must avoid at all costs.

BUSINESS LAW

focus and get lost in my business,

which is so easy to do. That is, I

focus exclusively on providing legal

services.

SO ARE YOU READY TO EXPAND YOUR BUSINESS?

Well the answer is yes if you are

taking action to (a) evaluate, monitor

and develop your business systems,

(b) you don’t get lost “in your

business” and you put together a

systematic plan to constantly and

continuously work on these business

systems (i.e., systems for attracting

new business, systems for employee

training; systems for monitoring

client satisfaction, and most

important, systems for ensuring

that you are delivering value to your

customers or clients) and constantly

improve them.

Slight confession, I have been

on trial for about a week and I

guess you can probably tell, I feel

somewhat guilty that I have not been

focused on the business systems of

our law firm. Trial went well though

and so did the outcome. But like

you, good service is not enough –

we each must deliver “value” to our

customers and this value requires

well executed business plans and

systems to ensure nothing falls

through the cracks.

TELECONFERENCE: WHAT ARE THE “TRICKS” AND “TREATS” OF FRANCHISING?

NEWS

Join our annual start-up franchisor teleconference on Wednesday, October 30 at 12:30 PM EST. During the call, we will discuss steps that successful business owners can take to expand their businesses through franchising. Submit a question or simply just listen in.

Registration is easy! Visit: www.FranchiseYourBusinessSeminar.com or call 800.976.4904. We look forward to hearing from you!

DISTRIBUTION RELATIONSHIPS – For product manufacturers

(including those many businesses that have their products

produced by factories overseas) and importers, distribution

relationships are critical and an excellent vehicle for expansion

and recruiting the resources and efforts and third party partners.

In the typical distribution relationship a contract is granted where

a third party is granted the right to distribute your products

within a certain market and subject to specified pricing criteria.

Distribution relationships occur, many times, out of business

necessity and present a primary expansion model.

Issues to Consider Before Entering into a Distribution Relationship:

■ Exclusivity – Whether or not the relationship will be exclusive to that particular distributor or whether or not you will be permitted to grant additional distribution rights to others.

■ Duration – How long the distribution relationship will last and what happens after the relationship is terminated.

■ Geographic Market – The geographic or internet based markets in which you will be granting the distributor rights.

■ Quotas – If the distribution relationship includes a form of exclusivity (i.e., a distributor is granted the exclusive rights to a certain geographic market).

■ Pricing – The prices that you will charge the distributor for product.

4

Charles N. Internicola is a business and franchise lawyer who is also an entrepreneur and franchisor. Charles “gets and understands” what it means to be a business owner. With that understanding, he has developed unique programs involving the representation of closely-held companies, franchisors, distributors and individual entrepreneurs in business transactions, franchising, licensing, and business litigation, including protection of intellectual property and partnership disputes.

The Business and Franchise Law Report is a publication of the Charles N. Internicola Law Firm, P.C., and is intended to educate the general public about business law issues. It is not intended to be legal advice. The information in this newsletter may be freely copied and distributed as long as the newsletter is copied in its entirety. newsletter design and layout by zinegraphics.com

ABOUT CHARLES N. INTERNICOLA, ESQ.

email cni@BusinessandFranchiseLaw.com | web www.BusinessandFranchiseLaw.com | tel 800.976.4909

Sir Thomas Watson

To be successful, you have to have your

heart in your business, and your business in

your heart.”

IN THIS ISSUE

ARE YOU READY FOR BUSINESS EXPANSION?

volume 1 | issue 6

1000 South Avenue | Suite 104Staten Island, NY 10314

1.800.976.4904www.BusinessandFranchiseLaw.com

BUSINESS LAW There are several options for business expansion.See which is best for you. PAGE 2

NEWS Teleconference: What Are The “Tricks” and “Treats” of Franchising? An annual event you dont want to miss! PAGE 2

INTERSECTION OF BUSINESS AND LAW Are You Ready For Business Expansion? PAGE 1

BUSINESS SPOTLIGHT What is “Franchise Univer-sity”? Critical information before you buy a franchise. PAGE 4

Sounds like a simple question but, chances are, you

already know that answering this question can get

complex. Keep in mind that I am not asking you “if

you would like to expand your business” (a simple

question that 99.9% of the time will be answered with

a simple yes) but, rather, are you “ready” to expand?

That is, have you identified the necessary steps to

expand your business and are you taking action?

THE PROBLEM: GETTING STARTED

The problem that many of us struggle with

on the expansion front is getting started. Sure, we are

all busy, focus on our work and work hard in delivering

products or services. The problem in just doing this is—

as author Michael Gerber articulated so well—that we

end up working “in our businesses” instead of “on our

businesses”. For example, as a business and franchise

law firm, many times (I am a lawyer after all) I spend the

vast majority of my time in the courtroom, negotiating

transactions or providing legal services. This is certainly

a good thing (since I enjoy what I do) but to truly “work

on my business” I need to set aside time and effort to

work on the business of the law firm. That is, reviewing

our client communications, reviewing the programs

that we offer, developing value based billing systems

and ensuring that our internal systems are focused on

delivering excellent and valuable services for our clients.

THE NEXT PROBLEM: STAYING

STARTED Once you get started you

need to keep going and ensure that you continue to

focus “on your business”. At our law firm there are many

business systems that we have developed to monitor

the quality of our work, the satisfaction of our customers

and attract only those new clients who will benefit from

our specialized programs. But like you, I sometimes lose

WHAT IS “FRANCHISEE UNIVERSITY”?The “Buying a Franchise University Series of Videos”

was created to educate and inform individuals who are

interested in entrepreneurship and buying a franchise. This

series gives access to critical information that you need to

know before you buy a franchise including practical and

real world insights that you can use and benefit from.

BUSINESS SPOTLIGHT

Visit “Franchisee University” at www.BuyingAFranchiseUniversity.com

QUOTE OF THE MONTH

INTERSECTION OF BUSINESS AND LAW

—continued on page 3