Originally from:
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
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CHAPTER 9
THE FRANCHISE
Section
§ 9.01 Definition
§ 9.02 General Summary of Franchises
§ 9.03 Federal Franchise Law Issues
§ 9.04 The Minnesota Franchise Act and Issues Arising Therefrom
§ 9.05 Piercing the “Franchise Veil” and Direct Liability of Franchisors to
Third Persons and Entities
§ 9.06 Advantages and Disadvantages of the Franchise Form of Business
Organization
§ 9.01 Definition
A franchise is “[t]he sole right granted by the owner of a trademark or
tradename to engage in business or to sell a good or service in a certain
area.”1 The franchise is not a separate form of business organization. It is
essentially a contractual relationship between franchisor or subfranchisor
and franchisee, with significant third-party beneficiaries and
with significant governmental and regulatory proscriptions and
prescriptions. The franchisor (who grants the franchise) and the franchisee
(who obtains the privilege) do business organized as proprietorships,
partnerships, or corporations. Their form of business does not have to
match. This Chapter provides a general overview of the use of a franchise.
§ 9.02 General Summary of Franchises
The franchise is, in essence, a license granted by the franchisor to the
franchisee. The state which grants a business corporate status grants a
franchise, the privilege to be deemed a separate entity and treated in
ways distinct from other forms of business organization (thus the term
franchise tax for the tax imposed on corporations by the state). The state
may also grant a “special franchise,” which is the privilege to use
property for public use with private profit such as that granted to utility
companies.2
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman
Brett Larson
Joshua Lederman
Karen Lundquist
James Magnuson
Jennifer Mead
Rao Menier
Heidi Miller
Rachael Moxon
Oliver Nelson
Scott Peitzer
Mitchell Skinner
Jonathan Stechmann
Lael Weinberger
Jonathan Wilson
Alex Zumbulyadis
