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?
What you're contemplating is a licensing model. It's like 'franchise lite.'
There are several questions you need to answer for yourself before you go recruiting any licensees.
For example, are there any business systems that will come with the franchise in addition to the brand name? How will you control the systems and guarantee the client experience?
The more 'controlling' your agreement is, the more you may be deemed to be selling a franchise which introduces complicated compliance requirements.
I've helped many others work out licensing schemes before. Arrange a call if you'd like to chat.
Also, you should read Franchise Warnings. Available from Amazon.
Answered 6 years ago