A recent article in the Franchise Times highlights some kid-focused franchises that are “tap[ping] into youth activity demand” during the COVID-19 pandemic. The article discusses how the impacts of the pandemic on children have resulted in an increased demand among parents for organized, educational, enriching and fun activities outside of school. If you are thinking about buying a kid-focused franchise, here are three important legal considerations to keep in mind from franchisee lawyer Jeffrey M. Goldstein:
1. Liability Risk
All types of kid-focused franchises carry liability risks. From the risk of children colliding with one another to the risk of children falling and getting injured, sports, activity and education-based franchises all entail risks that franchisees need to manage effectively. As a franchisee, you will be on the hook if a parent sues. Even if you are following the franchise’s Operations Manual to the letter, it is still going to be your responsibility if a child gets injured at your franchise.
With this in mind, what should you do? Liability insurance, liability waivers and adequate staffing are all important. So is common sense. Does something seem dangerous? If so, then consider making any necessary modifications to improve your franchise’s safety (as long as they are okay with your franchisor).
2. Franchise Recognition, Stability and Staying Power
A big part of the reason for buying a franchise as opposed to starting an independent business is the ability to benefit from the franchisor’s brand. Is the franchise you are considering already well-known among parents in your area? Stability is important as well. How long has the franchisor been in business? Did it popup in order to profit specifically from the COVID-19 pandemic?
Another critical factor is staying power. Buying a franchise is a long-term investment. Once you are in, there is no easy (or cheap) way out. So, are you confident that the franchise has post-pandemic staying power? Is the concept strong, and do the franchisor’s executives have experience in the franchise realm? Or, is there a risk that the franchise will fail and you will no longer receive the support you need once things get back to normal?
3. Franchise Agreement Rights and Restrictions
When buying any type of franchise, it is absolutely essential to thoroughly review the terms of the franchise agreement. In the vast majority of cases, some level of negotiation will also be necessary.
What does the franchise agreement say about things like minimum royalties, compliance with operational standards, territorial restrictions and cure periods? What are the conditions on your right to renew? There are numerous factors that require careful consideration when deciding whether a particular franchise is the right choice for you.
Discuss Your Kid-Focused Franchise Opportunity with Franchisee Lawyer Jeffrey M. Goldstein
If you are thinking about buying a kid-focused franchise and would like to know more about the legal considerations involved, schedule a free consultation at the Goldstein Law Firm. To speak with franchisee lawyer Jeffrey M. Goldstein in confidence, call 202-293-3947 or request an appointment online today.