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Licensing Somebody Else to Operate a Business Location

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  • 07-16-2014, 10:05 AM
    exp9382
    Licensing Somebody Else to Operate a Business Location
    My question involves business law in the state of: Michigan

    First most i would like to appreciate everyone who takes the time to answer my question. I know there are many of smart folks here. I will try to be as specific as possible.

    1: I currently operate some local business inside some retail properties. All the contracts are under my name. I am thinking of giving the store to someone else, but the contract will remain under my company. I am going to charge them a fee to use my name. So here is my question, since he has his own SALES TAX NUMBER, can he just pay the retail tax himself? Or do i need to collect those taxes and use my sales tax number?

    2: As my current agreement with the Retail property, they require that we submit our total monthly sales. Do they report to the IRS our monthly sales? Or why would they need that information? So if that is the case, since the contracts are under my name, then the IRS would think i am making that extra money, even though i am not collecting any of those retail sales?

    What i am trying to do is like a franchise, without going through all those hassles. I only have 3 stores, and i want to make a cut from each and not have to work. All information and help is appreciated.

    Thank You.
  • 07-18-2014, 09:08 AM
    Mr. Knowitall
    Re: Licensing Somebody Else to Operate a Business Location
    You need to have your business lawyer draft appropriate contracts to govern the licensing arrangements, and to make sure that you don't inadvertently violate franchising laws by imposing impermissible restrictions on the operation of the business under your name. Franchising may be a lot of hassle, but it allows you to ensure that businesses operating under your name are meeting your standards. A case of food poisoning or employee misconduct at a business under your name can potentially take down the entire chain.

    You can ask your landlord what it does with the information they require from you, beyond using it to set rent.
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