Cypress, TX asked in Business Formation and Business Law for California

Q: Can I buy a franchise business in my personal name in the state of California?

My foreign entity is in the process of being registered in CA but will take some time.

2 Lawyer Answers
James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Sacramento, CA
  • Licensed in California

A: In California, you can buy a franchise business in your personal name. This is possible even if your foreign entity is still in the process of being registered. However, conducting business under your personal name means you will be personally liable for all aspects of the business. This includes debts and legal obligations.

It's important to consider the implications of personal liability versus the protections offered by a business entity. Once your foreign entity is registered in California, you could transfer the franchise to the entity. This would provide a shield for your personal assets against business-related liabilities.

Before proceeding, it's recommended to consult with a legal advisor to understand the full scope of your responsibilities and liabilities. They can guide you on the best course of action based on your specific situation and ensure compliance with all relevant laws and regulations.

Fritz-Howard Raymond Clapp agrees with this answer

Fritz-Howard Raymond Clapp
Fritz-Howard Raymond Clapp pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Beverly Hills, CA
  • Licensed in California

A: You should be able to acquire the franchise in your personal capacity, then assign it to the company when it is qualified, but the franchisor must understand and agree that you intend to assign the franchise to your company. The company will have to agree to the obligations to the franchisor in return for the assignment.

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