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A Fran-What?!

Surprise! You may be involved in a franchise relationship and not even know it.

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This story appears in the March 2003 issue of Entrepreneur. Subscribe »

If you entered into a franchise agreement, you'd know it, right? Not necessarily. In several recent cases, companies terminating distributor relationships were surprised to learn that the law considered them franchisors, subject to state franchise laws.

"Most people, including lawyers, think a franchise is McDonald's or Ramada Inn," says Edward Dunham, a partner in the New Haven, Connecticut, law office of Wiggin & Dana who specializes in franchises. But legislatures designed franchise laws to protect a wide range of small businesses that depend on their relationships with particular companies.

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