Florida Franchise Law: What is an ‘Inadvertent Franchise’?
Before entering into a franchise arrangement, it is crucial that both franchisors and franchisees have a clear understanding of their rights and responsibilities. These companies should operate under a carefully drafted franchise agreement that has been reviewed by an experienced attorney.
However, unbeknownst to many people, Florida law makes it possible for a franchisor-franchisee relationship to be created even if it was not actually intended by either party. This is typically referred to as an ‘inadvertent franchise’. In this article, our top-rated Miami franchise law attorneys provide an overview of the when a franchise relationship can be ‘inadvertently’ created under the Florida Franchise Act.
Florida Franchise Act: The Business Relationship Matters
Florida has one of the broadest and most well-developed set of franchise laws of any state in the entire country. Under Florida law, a franchisor-franchisee relationship exists based on the actions of the parties involved — not the intentions. In this sense, Florida law is in contrast to some other jurisdictions, where a franchise agreement, either written or oral, is required for a franchisor-franchisee relationship to be formed. However, in Florida, a franchise relationship can exist even if the parties never used the word “franchise” in their dealings. In fact, this type of relationship can exist even if the parties actively intended to avoid a franchise designation.
What Business Arrangement Creates Franchisor-Franchisee Relationship in Florida?
Under Florida state law, any commercial relationship in which one party (a franchisee) is given the right to sell/distribute products or services under the direction of another party (a franchisor) could potentially be a franchisor-franchisee relationship. Once again, it is important to remember that lack of intent is not a valid defense against the existence of a franchise relationship in Florida.
Avoiding an Accidental Franchise in Florida
There are a number of reasons why a company may wish to avoid entering into a franchise relationship. If your company wants to avoid a franchise designation, it is imperative that you make sure that you have the proper business structure in place. Licensure agreements and distribution agreements must be carefully crafted and executed in order to help companies ensure that they can avoid entering an inadvertent franchise relationship.
In most cases, accidental franchises arise in Florida because the parties fail to understand and consider the state’s requirements in creating licensing and distribution agreements. The last thing any company wants to deal with is facing unanticipated liability as a result of an accidental franchise. If you have any questions or concerns about Florida franchise law and your company, you should consult with an experienced Miami franchise lawyer right away.
Contact Our Miami Franchise Law Attorneys Today
At Pike & Lustig, LLP, our Florida franchise law lawyers have experience representing both franchisors and franchisees. If you have questions or concerns about whether an inadvertent franchise relationship was created, we are here to help. To arrange a strictly confidential review of your situation, please contact us now. We have offices in Miami, West Palm Beach, and Palm Beach Gardens.