Inadvertent franchise relationship: What you should watch for


Originally published in the Colorado Real Estate Journal, July 20, 2011 - August 2, 2011.

Franchising, a versatile business model, is not limited to fast-food restaurants. Colorado is home not only to familiar franchise concepts such as Smashburger, but also to concepts not routinely thought of as franchises including Crestcom International and Living Well magazine.

Colorado real estate attorneys working with clients with lease agreements, hospitality venues, licensing, tax, zoning, financing, regulatory and other issues should be on the lookout for the inadvertent franchise relationship because such a relationship can create unanticipated legal consequences. These include civil and criminal penalties, private actions for rescission and damages, and individual liability for control persons. Taking the time to understand the nature of your client’s business and being able to assess whether or not an inadvertent franchise relationship exists allows you to respond carefully to evolving legal needs...

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