If you have been doing your research on buying a franchise, you have no doubt heard that you need to hire a franchise lawyer to help you through the process. But, do you know why? If you have made up your mind and the franchisor only offers a standard “form” contract, what is the value in hiring a franchise attorney?
Actually, there are several reasons why prospective franchisees need to seek experienced legal representation. Here are just some of the ways that a franchise lawyer can help during the franchise buying process:
1. An Independent Perspective
As a prospective franchisee, the primary factors influencing your choice of a particular franchise opportunity are: (i) information you received from the franchisor, and (ii) your personal feelings about the franchise (and, perhaps to a lesser extent, its competitors). A franchise lawyer can offer an independent perspective. Are you viewing the opportunity through rose-colored glasses? Is the franchisor’s sales rep conveniently omitting certain information? An experienced franchise lawyer will be able to take a step back and take personal motivation out of the equation.
2. Industry Insights
How does the franchisor really stack up against its competitors? Are its franchise agreement terms on par with those offered throughout the industry? Does the franchisor have a history of litigating with its franchisees? How is the franchisor viewed amongst its peers and industry professionals? While not all franchise lawyers will have these types of insights, one who has been in the industry for decades will have a wealth of information to help you make a better-informed decision.
3. Interpreting Legal Language
Franchise Disclosure Documents (FDDs) and franchise agreements are long and complicated documents that are filled with complex legal language. To make sure you understand your rights and obligations, you need to have them reviewed by someone who can help you understand what they really say. What territorial protections does the franchisor offer (if any)? What missteps can result in termination of your franchise? How much control does the franchisor have over transfers and renewals? Answering these types of questions requires a discerning and knowledgeable review of the key FDD and franchise agreement terms.
4. Identifying Potential Pitfalls
The most-costly issues for franchisees are usually the ones they don’t see coming. In order to mitigate your risk of unexpected liabilities and expenses, you need to be aware of potential pitfalls before you sign your franchise agreement.
5. Negotiating the Franchise Agreement
Finally, while franchisors’ sales reps will often tell prospects that their franchise agreements are offered on a take-it-or-leave-it basis, this is usually nothing more than a sales tactic. The sales rep wants you to sign the agreement as soon as possible so that he or she can earn a commission before you realize just how one-sided the agreement really is. Most good franchisors are wiling to consider reasonable requests to modify their franchise agreement, and an experienced franchise lawyer will be able to help you submit a proposed amendment that provides some important protections.
Get a Flat-Fee Franchise Business Review From the Goldstein Law Firm
If you are thinking about buying a franchise, attorney Jeffrey M. Goldstein can use his 30-plus years of franchise law experience to help you make an informed decision. To inquire about our flat-fee franchise business reviews and receive a free initial consultation, please call (202) 293-3947 or contact us online today.