Companies that resell items made by another company have either a franchise agreement or a distribution agreement. A franchise agreement gives the business the right to market or sell goods and services under the trademarked name or patented process of the other business.

Small businesses often decide to franchise their business when they’re looking to expand. However, there are legal issues they might want to consult an attorney on when taking the steps to franchise. An attorney can help develop a business plan and create the appropriate franchise contracts.

Strong franchise companies have a uniform contract for all of their franchisees to sign. A small business owner should consult an attorney because these contracts bind the parties to a long-term business relationship, and they will need to make sure their interests are protected. 

The contract between the franchisor and the franchisee details the rights, responsibilities, obligation and compensation of both businesses in relation to the purchase and operation of the franchise. There are also federal and state regulations that the small business owner may not be aware of when they begin the process.