Legal Requirements

Before you open your business, there are some specific steps to take from a legal standpoint. Here are a few things to keep in mind:

*Bin There Dump That is not qualified to give legal advice nor is this content meant to be taken as legal advice. We strongly urge everyone to consult an attorney and accountant when establishing your business.

Determine the Legal Structure of Your Business

Sole Proprietorship

This structure is chosen if you plan to operate the franchise on your own under a business name or your own name. Taxes are paid through personal income tax returns and you are responsible for the business’s debts.


Establishing a legal partnership may be necessary if you have one or more partners. Financial risks are similar to that of a sole proprietorship.


A separate legal entity owned by multiple shareholders. C-corporations limit each shareholder’s personal liability for the company’s debts to the amount invested. Limited to 100 stakeholders.


In the U.S., S-corporations receive special tax status with the IRS that eliminates the possibility of having to pay the same taxes twice. Unlike a C-corporation, S-corporations have an unlimited number of stakeholders.

Limited Liability

A limited liability company (LLC) offers a hybrid of a partnership and corporation. 

Register the business name

As a franchise operator, you’ll operate a business under a name other than yours. You’ll need to register the franchise’s name to apply for loans, receive funding and attain the necessary permits and licenses.

Employer identification number or business number

An Employer Identification Number (USA) or Business Number (Canada) is required for collecting, withholding and remitting taxes.

You can apply for an EIN online with the Internal Revenue Service and a BN with the Canada Revenue Agency.

Apply for licenses and permits

Depending on your state, you may be required to hold specific licenses and permits to conduct your business. A representative of the franchise may be able to provide guidance and ensure you have the necessary documentation.

Don’t know where to start?
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