Can I invest in part of a franchise (franchisee) and also the franchiser?

[Bird dog]

What is the name of your state (only U.S. law)? Colorado

Hello all,

I’m investing in a medical services franchise company which licenses their brand to medical clinics and provider groups. As far as franchise law can be owner/investor of both the franchisee (clinic) and the franchiser company? Does that give me some unfair advantage over franchisees not engaging in investing/part ownership of franchiser?

To put it simply, can a chick fil a executive with lots of shares in the company open up a bunch of chik fil as? Also how does the corporate practice of medicine laws (stork laws?) apply to this?

BD

 

[Taxing Matters]

What is the name of your state (only U.S. law)? Colorado

To put it simply, can a chick fil a executive with lots of shares in the company open up a bunch of chik fil as?

There is no federal or Colorado law that would prevent the executive from opening his own franchises. So assuming that the franchisor has not problem with it he certainly could do that. The executive would have to take care that he not violate his fiduciary obligations to his employer, however.

Also how does the corporate practice of medicine laws (stork laws?) apply to this?

Whether any of the laws that regulate the practice of medicine in Colorado would restrict you from both operating a medical clinic franchise and investing in the franchisor is something best asked of a lawyer who is familiar with the laws on medical practice in the state. One of the problems that I could foresee is ensuring that the franchisor does not interfere with the independent medical decisions of the clinic staff. If you are a doctor in the medical clinic and also an investor (perhaps as shareholder) of the franchisor, there is the risk that you might let the prospect of profit for the franschisor (thus a bigger pay off for you) affect the medical decisions you make for patients.