What are the rules for setting up a franchise?

In Delaware, the rules for setting up a franchise will depend on the type of business you plan to operate. Generally speaking, franchises are businesses that grant one or more franchises to another business. This means the franchisee has the right to use the franchisor’s trademark, service marks, or trade names. Franchisors must register and file a FDD (Franchise Disclosure Document) with the Delaware Office of the Secretary of State. The FDD is a comprehensive document that outlines the franchisor’s business plan, including their trademark, service marks, trade names, fees, and other important details of the franchise. Once the FDD has been approved by the Delaware Office of the Secretary of State, a franchise agreement must be created, signed, and filed with the Office of the Secretary of State. The franchise agreement outlines the obligations of both the franchisor and franchisee, such as responsibilities related to sales, advertising, product quality, and customer service. To protect Delaware’s franchisees, the state also requires both parties to enter into a franchise registration agreement. This agreement outlines the rights and responsibilities of both parties and also requires the franchisor to maintain certain financial records including a franchise agreement. In addition to the above, franchisors must meet any applicable local, state, and federal regulations related to their type of business before they are able to operate in Delaware. All of this information must be clearly stated in the FDD and franchise agreement before it is approved and filed with the Delaware Office of the Secretary of State.

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