This week's video discusses a case where a business owner wanted to expand, but didn't want to invest the time and money to create a franchise disclosure document (FDD).

There's a saying:  "If it walks like a duck, quacks like a duck and looks like a duck, then it's a duck."  This rule applies to franchises.  Often, entrepreneurs want to expand their businesses by selling rights to let others operate the same business under the same name.  Typically, to save the significant expense of developing the franchise documentation and the accounting work, the entrepreneur wants to call the arrangement a "license."

Unfortunately, as this case shows, you don't get to decide whether it's a license or a franchise.  If it has all the characteristics of a franchise, it's a franchise.

And, as this case shows, if you don't follow the franchise disclosure requirements, your licensee (franchisee) can turn around and sue you personally - ouch.  (By the way, they never sue when things are going good and the business failure is never the licensee's fault.)

You can read the full case here:

Enjoy the video.