If you are thinking about buying a franchise, you have probably been told that you should speak with a franchise attorney. You have probably been told that a franchise attorney can help you understand the Franchise Disclosure Document (FDD) and maybe even help negotiate your franchise agreement.
But, there are a number of other ways that a franchise attorney can help you during the buying process as well, including:
1. Comparing Your Chosen Franchise Opportunity to Competing Franchises
When buying a franchise, most of the information you obtain about the franchise will come from the franchisor. You can (and should) speak to current and former franchisees during the due diligence process as well; but, even then, you are still only gathering information about the specific franchise you have selected. An experienced franchise attorney will be able to access competing franchise systems’ FDDs and franchise agreements, and use the knowledge gained from representing numerous other clients to help you make an informed decision.
2. Identifying and Evaluating Legal Risks Related to Your Chosen Franchise Opportunity
Beyond simply summarizing the key provisions of your FDD and franchise agreement, an experienced franchise attorney will also be able to identify and help you evaluate legal risks that you likely would not be able to spot on your own. For example, while access to proprietary branded products may seem like a good thing, there are also risks involved in committing to the use of third-party products and suppliers.
3. Helping You Form a Limited Liability Company (LLC) or Other Business Entity
Before you buy your franchise, you will most likely want to form a limited liability company (LLC) or other business entity. Doing so offers a number of benefits; and, in the context of buying a franchise, there are some unique considerations involved as well. For example, if you form a business entity, your franchisor (and probably your lender) will probably ask you to sign a personal guarantee. Should you? If so, what pitfalls do you need to avoid?
4. Reviewing and Negotiating Your Lease and Other Contracts
The franchise agreement is probably not the only contract you will need to sign in order to open your franchise. From commercial leases to vendor agreements, there are various other contracts you may need to sign, and you should generally have an attorney review these as well.
5. Referring You to Other Professionals with Franchise Industry Knowledge
Where can you find a good accountant? Should you hire a business coach or franchise advisor? An experienced franchise attorney should be able to help you assess your needs and refer you to trusted professionals with franchise industry knowledge.
6. Providing Insight Based on Past Experience
Buying a franchise is a complex investment that involves a variety of legal and financial risks. The more you know, the better off you will be. An experienced franchise attorney will be able to provide valuable insights into what previous clients have found successful, where they have run into trouble, and how they have overcome legal issues as a franchise owner.
Schedule a Free Initial Consultation at the Goldstein Law Firm
Jeffrey M. Goldstein is a national franchise attorney with over 30 years of experience exclusively representing franchisees and dealers. To discuss your franchise-related legal needs with Mr. Goldstein in confidence, please call 202-293-3947 or request a free initial consultation online today.