Let’s first define the differences between an agent and a Realtor.

A licensed real estate agent helps people to buy (buyer’s agent) or list (listing agent), and leads all negotiations. NAR membership is not mandatory for real estate agents. NAR is the National Association of Realtors, the largest trade organization in America. A member of NAR, also known as a Realtor, is required to not only perform the usual agent duties, but also adhere to the Realtor Code of Ethics and attend regular training. They are also charged a $150 annual fee.

Duty and responsibilities for real estate agents and Realtors

Real estate agents conduct transactions for a buyer or seller. They go through the steps. A real estate agent begins by locating a property to sell or buy for a client. They advertise properties by preparing flyers, hosting open houses, etc. The importance of sharing information with all parties in a real-estate transaction cannot be overstated. A real estate agent can provide every detail of a property to a buyer or seller, but should do so in a way that protects confidentiality and does not violate anyone’s right. A real estate agent will also negotiate. They will analyze the information provided by a buyer or seller regarding their requirements and the property and then advise the customer to take certain steps. Agents are not responsible for making the final decision.

What is a Fiduciary duty?

Fiduciary duties are a legal obligation to act in a manner that protects another’s interests. Real estate agents and realtors also owe certain duties to their customers. These duties involve:

Confidentiality

A real estate agent is required to respect the fundamental rights of clients and to not disclose information that could negatively affect the transaction process.

Disclosure

Fiduciary disclosure means to be truthful and fair. Real estate agents should disclose information to customers if necessary for the transaction process, without violating confidentiality duties. This includes all offers, any facts that may affect the value of the property, and other issues that could prevent a buyer or seller from buying the property for a low price.

Loyalty

An agent must be loyal at all times and in any location. Agents are required to put the customer’s interests ahead of all other parties.

Use reasonable care & diligence

Duty of reasonable care and due diligence means that a real estate agent must use all their knowledge and skills to protect the client’s interests and ensure the success of the transaction. All professionals have a duty to their clients. Real estate agents must do their best to demonstrate and use their expertise in their field, and avoid making harsh mistakes or avoiding their duties.

Obedience

Real estate agents are required to follow the lawful instructions given by their clients. Agents should follow the instructions of their clients, even if they don’t agree. Agents are free to ignore instructions if they believe that a client’s decision is illegal.

Accounting

Agents should keep track of all documents, money and property that are involved in the transaction. Accounting should be precise. This is even more important if you are running your own real estate franchise.

The Realtor Code of Ethics

The Code of Ethics, although it was created for members of the National Association of Realtors only, is also beneficial to non-members. The Code of Ethics was adopted in 1913 and includes 17 articles. The Code of Ethics has three types of obligations: to clients and customers; the public; and to realtors. Realtors’ duties to customers and clients include promoting and protecting their interests while not violating the rights of those involved. All realtors must meet the competency standards, and provide equal and appropriate service to all clients, regardless of their nationality, race, religion, sexual orientation, or color. All realtors must respect their co-workers. All realtors should respect their colleagues and be objective with them.

The Realtor Code of Ethics & Standards of Practice is a good place to start if you’d like to learn more.

When a realtor violates the NAR standards it’s usually first discussed locally. This process may involve different bodies such as the Grievance Committee of the association, the Professional Standards Committee, or the Board of Directors. If a violation is proven, the sanctions include a reprimand or a fine up to $5,000, as well as attending a course of education.

Final thoughts

Real estate agents and realtors are not easy to find. Along with their jobs, they have many duties. It is difficult to be an effective real estate agent, but it can still be a rewarding career if you’re self-motivated and hard-working, as well as enjoy interacting with people of all kinds.

The Legal Obligations of a Franchise Owner

Franchise ownership can be a lucrative and rewarding endeavor. However, it comes with a number of legal obligations that must be taken into consideration. 

Here at Lawyers Helping People we believe it is important to understand the legal obligations associated with franchise ownership. Here we’ll provide an overview of franchise ownership and discuss the various legal obligations of a franchise owner.

Defining legal obligations

When considering the legal obligations of a franchise owner, it is important to understand the Franchise Disclosure Document (FDD). This document is meant to provide potential franchise owners with important information that will help them make an informed decision about investing in a franchise. 

The FDD includes information about the franchisor and its affiliates. The franchise system, fees and franchise cost, the territory, the products and services offered, the franchise relationship, must be included.  

Additionally, all franchise owners must sign a franchise agreement, which outlines the terms and conditions of the franchise relationship. It will include information about the franchisor’s obligations, the franchisee’s obligations, the duration of the agreement, and any renewal provisions. 

It is important to read and understand the franchise agreement thoroughly before signing. It will dictate the terms of the franchise relationship.

State Laws

State laws must be complied with when owning a franchise. Depending on the state, franchise owners may need to register their franchise with the state and pay any associated fees. 

Furthermore, some states have laws that govern the relationship between the franchisor and franchisee. This may include disclosure requirements and restrictions on certain contractual provisions. It is important for franchise owners to research and understand the relevant state laws in order to ensure compliance. 

Federal Laws

At the federal level, all franchisors must comply with the FTC Franchise Rule. This rule requires franchisors to provide potential franchisees with a disclosure document. This disclosure contains information, including the franchisor’s financial statements, the franchise agreement, and the details of the franchise system. 

Additionally, the FTC Franchise Rule outlines specific requirements for the franchise relationship and any contractual provisions.

Tax Obligations

As with any business, franchise owners are also responsible for paying taxes on their income. Depending on the type of business structure, franchise owners may need to pay corporate income tax, as well as employment taxes for any employees they may have. It is important to understand the tax implications of owning a franchise in order to ensure compliance with federal and state tax laws. 

Business licenses and permits

In addition to taxes, franchise owners must also obtain any necessary business licenses and permits. For example, local business permits may be required in order to operate the franchise in the jurisdiction. Depending on the franchise type, there may also be other licenses or permits required before the franchise can begin operations. 

Contractual Obligations

There may be other contractual agreements that franchise owners are subject to. These obligations can include performance standards, such as customer service requirements, as well as non-compete agreements. It is important to read and understand these contractual obligations before signing the franchise agreement.

Insurance Requirements

Franchise owners must also comply with certain insurance requirements. Property and liability insurance are both recommended for franchise owners. This is in order to protect their business from any potential losses or damages. 

In some cases, the franchisor may require the franchise owner to carry certain types of insurance in order to operate the franchise. 

Compliance with trademarks

As a franchisee, you represent a larger corporation. Therefore, franchise owners must also comply with the franchisor’s trademarks. This includes using the franchisor’s trademarks correctly and avoiding any potential trademark infringements. 

If a franchise owner is found to be in violation of the franchisor’s trademarks, they may face legal action. 

Franchisor responsibilities

Finally, franchisors must also provide certain support and training to their franchisees. This includes providing assistance with marketing and advertising, as well as providing training for employees. Additionally, franchisors must also provide their franchisees with any promotional materials, such as flyers and signage.

Conclusion

Franchise ownership comes with a number of legal obligations that must be taken into consideration. Franchise owners must comply with state and federal laws, pay taxes, obtain necessary business licenses and permits, and comply with contractual obligations. 

Additionally, franchise owners must also comply with the franchisor’s trademarks and insurance requirements, as well as receive support and training from the franchisor. Understanding and complying with these legal obligations is essential for any franchise owner.

The best way to make sure you’ll be in compliance and ready for ownership is to schedule a legal consultation. A licensed and trusted business attorney will be able to answer any questions and address any concerns you may have.