Questions

Have a fitness training company which has built quite a reputation due to name clients. I would like to branch off and allow people I know to use the brand and market as being affiliated with us. In return they would pay a monthly fee. What do I need to do legally? What needs to be done to protect myself and the company? Would I be able to do this with just a contract agreement and a waiver that their clients would sign protecting us? What about tax implications? Could this just be counted as ordinary income?

I am not a lawyer or an attorney and this is not "professional advice."

Hire an accountant who is familiar with licensing.

Stay away from the franchising route if you can: it's expensive, the lawyers are expensive, and you are open to attack from inside and out (franchisees and customers). I was a senior executive at an Inc. Top 1000 franchise firm and saw this from the inside--though we didn't have an issue with our franchisees, I saw plenty of franchisors who did.

Learn about licensing. Figure out how to write the contract so you have control over some measurable variables, eg. customer count, revenues, # of complaints, etc. As long as the licensee remains in tolerance, they're fine, but if they go outside you drop them.

You are going to have to invest in an attorney to create the boilerplate contract, and an accountant to manage the process (which you should probably do first.) Don't cheap out. You're protecting yourself here.

BTW looks like Jeff Retchman in this thread could help you as well: https://clarity.fm/questions/1258/how-to-license-with-a-revenue-based-model


Answered 6 years ago

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