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Licensing Agreements For Your Products And Business Systems

By Business Contracts, Business Lawyer, Internet Lawyer

licensing agreements

In recent articles, I’ve shared with you two effective ways to grow your business on the Internet (sampling and endorsed reciprocal promotions). A third strategy to consider is licensing agreements.


Selling licenses for your products and business systems to other businesses can be a profitable method for growing your company without additional labor costs. Your licensees may pay an initial licensing fee in addition to ongoing royalties on sales made.

If you’re licensing a business system you own, it’s important to comply with applicable business opportunity rules and regulations. Your Internet business attorney can answer any questions you have about these limitations.

Related Article – 7 Keys To Picking The Right Internet Lawyer For Your Business

In addition, you’ll want to avoid setting up the licensing arrangement in such a way as it could be construed by the government as a franchise.

Why licensing agreements instead of franchises?

Franchising is a heavily regulated method of doing business because of a long history of franchisor abuse of franchisees. When you’re a franchisor, you’re under heavy scrutiny from federal and state agencies looking to protect both franchisees and their consumers.

Related Article: Licensing Agreements – How To License Products In 3 Easy Steps

Licensing agreements properly drafted by a qualified business lawyer will ensure that you get what you want from the deal while protecting your intellectual property rights in the process.

Internet Franchising: Fake Franchises

By Internet Lawyer

franchiseScams keep getting recycled offline and online. We’re seeing an increase in franchise flopportunities being offered by Internet marketers. “Franchise” is a buzzword that converts because clients think they’re buying something tangible like a McDonalds® restaurant.

In reality, what’s being sold is yet another get-rich-quick biz opp. The only repackaging that’s occurred is that the client is promised exclusive territorial rights for the Internet biz opp.

From a business standpoint, these offers are a joke. Buying the exclusive rights to use Ima Guru’s web design methods in Los Angeles? You’re paying for an overpriced info product and there are plenty of web designers who will compete with you for business.

From a legal standpoint, the “franchise” probably isn’t a franchise. Why? The Internet marketer has done absolutely nothing to create a legal franchising system.

Two quick ways to tell…

1. Ask the “franchisor” for a copy of his franchise offering circular.
2. Ask for proof that the “franchisor” has qualified to do business in the state where the territorial franchise is located.

To date, no Internet marketer I’ve asked has provided either. In short, these franchises are scams.

Worldwide Internet Consulting: Franchise Scam

By Internet Lawyer

Ian del Carmen is selling territorial franchises for Worldwide Internet Consulting. Nothing says “proven business model” like pitching a get-rich-quick scheme (make $500 an hour!) that teaches you the supersecret concept of building websites for local businesses and charging them for it. With only 133  million search results on Google for “web design,” who wouldn’t want to pay $697 (plus $97 annually after the first year) to buy a franchise.

Here’s the website’s registration info.

Domain name:

Registrant Contact:
   Fireball Planet Corporation
   Fireball Planet Corporation ()

   G/f Feron Bldg 9590 Kamagong cor Bagtican sts
   San Antonio Village
   Makati City, Metro Manila 1203

Can we presume that Ian del Carmen is operating out of the Philippines only because the weather was too hot to operate the scam out of Nigeria?

The website doesn’t mention the term “franchise.” Instead, we get code for it like “we’re only accepting one partner per territory.” However, the e-mails pitching the business flopportunity include phrases like “Just grab your franchise here” and “see the details of this franchising offer.”

For credibility, the sales pitch notes that Microsoft, Google, and Amazon have territorial managers too. Comparing a scam “franchise” to salaried employment at three of the largest online companies? That’s ridiculous.

Of course, you do get ready-to-print business cards that state you’re a “Certified Marketing Consultant.” Oh really? Why not “Certified Dupe” instead?

Now let’s look at the particular legal aspects of this franchise scam.

  • The biz flop is being sold in county-size territories within the United States. However, potential franchisees are not being supplied with Uniform Franchise Offering Circulars (UFOCs) as required by federal and some state laws.
  • There does not appear to be any attempt to qualify to do business in each state where franchises are being sold.
  • Utilizing the term “partner” in the sales pitch suggests that equity may be sold as part of the deal. If so, there appears to be no effort to comply with U.S. federal and state securities laws.

Don’t think that I’m just picking on poor Mr. del Carmen and his flopportunity. There is at least one U.S.-based Internet marketer (social media guru) treading on thin ice with something similar. If that marketer doesn’t clean up his act, I’ll be posting about his scam too.

If you’ve been deceived into buying an illegal franchise in the United States, here’s what to do.

1. Demand a full refund.

2. Contact the U.S. Federal Trade Commission.

3. Contact your state’s Attorney General’s office.

4. If you still want blood, hire a good trial lawyer to destroy the con artists who duped you.

05/16/09 – Someone hacked and destroyed this post. It was restored but comments were lost. Because this post was targeted, comments will be closed indefinitely. Not rewarding bad behavior.