Alabama Franchise Forms - Alabama Franchise Law

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Alabama Franchise Forms FAQ Opening A Franchise In Alabama

What is a franchise?

There is a definition of a franchise which has been developed by the Federal Trade Commission. Basically, a franchise involves an owner of a trademark, trade name and/or copyright giving others a license under certain conditions to use these trademarks, trade names or copyrights in providing goods or services to the public. The franchisor is the party who grants the franchise, and the franchisee is the party who receives the franchise.

What is the legal relationship between a franchisor and franchisee?

Technically, the relationship between a franchisor and franchisee is a relationship between two independent contractors. Their rights are determined by the franchise agreement. A franchise then is not a separate business entity, but is a business relationship between two separate business organizations such as a sole proprietorship, a corporation, or a partnership. The relationship between the franchisor and franchisee is controlled by the franchise contract. A corporation, sole proprietorship, or partnership may own the franchise contract or may be the entity entering into the franchise contract.

What laws govern franchises?

There are laws that restrict termination of some franchises. In some states, prior notice of termination is required. Owners of automobile dealership franchises are protected from termination of their dealerships in bad faith. This protection is provided by the Federal Automobile Dealers Franchise Act.


What are Articles of Incorporation?

Articles of Incorporation are legal documents that establish the existence of a corporation. These articles outline important information about the company, such as its name, purpose, structure, and the rights and responsibilities of its owners, also known as shareholders. In the state of Alabama, the Articles of Incorporation must be filed with the Secretary of State's office. This process is required to legally form a corporation in Alabama and ensures that the company is recognized as a separate legal entity. The articles provide important legal protection and set the foundation for how the corporation will operate and be governed.


What to Include in Articles of Incorporation

The Articles of Incorporation are an important legal document that must be filed when starting a corporation in Alabama. It helps establish the identity and purpose of the corporation, so it's essential to include specific information. Simple language and clear phrases should be used. Some important things to include are the corporation's name, which should be unique and not confused with other existing businesses. You should also mention the corporation's purpose, clearly stating what the company will do or provide. It's important to specify the corporation's principal office address in Alabama. Additionally, the document should state the number of shares the corporation is authorized to issue and the classes of stock it may offer. The incorporated's name and address should also be included. Remember to sign and date the articles before submitting them to the Alabama Secretary of State's office for approval.


1. Full Name of Corporation

The full name of the corporation in Alabama is a legal and official name that encompasses the complete and entire identity of a business entity operating within the state of Alabama. This name serves as a clear and concise representation of the corporation, allowing it to be easily recognized and identified by both government agencies and the public. It is crucial to ensure that the full name of the corporation in Alabama adheres to the state's legal requirements and accurately reflects the nature and purpose of the business.


2. Principal Place of Business

The principal place of business is the main location where a company or organization conducts its day-to-day operations and carries out its core activities. In the context of Alabama, this refers to the main office, store, or facility where a business is located and operates within the state. It is the central hub where all the important decisions, administrative tasks, and customer interactions take place. The principal place of business in Alabama serves as the headquarters and serves as the main point of contact for the organization within the state.


12. Limitation of Director’s Liability

In Alabama, there are some limitations on a director's liability in businesses. These limitations help protect directors from being held personally responsible for certain actions or decisions made on behalf of the company. For example, directors are not typically held liable for debts or obligations of the business unless they guaranteed them personally. Additionally, directors are generally protected from liability for honest mistakes or errors in judgment. However, it is important for directors to fulfill their legal duties and act in the best interest of the company to avoid any potential liability.