If you are serious about buying a franchise, you are most likely aware of the recommendation that you hire a lawyer to perform a franchise business review. But, with all of the up-front costs you will need to incur already, and since you are prepared to move forward even though the opportunity has its risks, do you really need to pay for a review?
Of course, you know our answer already. With more than 30 years of experience in franchising, we have represented thousands of new and existing franchisees, and we have seen far too many franchisees struggle and lose their businesses simply because they failed to take the necessary precautions during the buying process. With this in mind, here are our top four reasons why we believe all prospective franchisees need franchise business reviews.
4 Reasons Why All Prospective Franchisees Need Franchise Business Reviews
1. Buying a Franchise is a Major, Long-Term Investment
You have heard this before too, but it bears repeating: Buying a franchise is a major, long-term investment that could have significant implications for your family’s finances. If you decide to move forward, your decision needs to be based on the advice of experienced professionals who understand what you are getting yourself into.
2. The Franchisor is Putting Its Best Foot Forward
During the buying process, the franchisor is giving you its sales pitch. If you are a strong candidate, it wants you to buy a franchise because it knows that (i) you have a reasonable chance of success, and (ii) even if you don’t succeed, it can kick you out and find someone new. This means that the information you are receiving is skewed, and it means that you need to hire a lawyer to give you a fair and balanced assessment of the quality and viability of the franchise opportunity.
3. The Franchise Agreement Might Not Say What You Think It Says
Franchise agreements are long and complex contracts with provisions that impact others and with language that even many lawyers do not understand. Additionally, while the Franchise Disclosure Document (FDD) should accurately explain the key terms of the franchise agreement, this is not always the case. During your franchise business review, your attorney will make sure you have a clear understanding of your contractual obligations and your (limited) contractual rights.
4. You May Need to Negotiate the Franchise Agreement
Franchise agreements are not take-it-or-leave-it contracts. While the franchisor’s salespeople may try to get you to sign the agreement as-is, you need to ensure that you negotiate any necessary protections. During your franchise business review, your attorney can identify the key terms that you should try to negotiate; and, if desired, your attorney can negotiate these terms on your behalf.
This list is not exhaustive, but these are some of the most important reasons why all prospective franchisees need franchise business reviews. To learn more, contact us for a free initial consultation.
Learn about Our Fixed-Fee Franchise Business Review Programs
Are you thinking about buying a franchise? For more information about our firm’s fixed-fee franchise business review programs, call us at 202-293-3947 or inquire online today.