If you are thinking about buying a franchise as a way to own your own business, there is a lot you need to know. From the nature of the franchise relationship to the details of your franchise agreement, there are numerous considerations that should weigh into your decision to become a franchisee. While many franchisees are able to find success, the failure rate across the franchise industry is high, and making an informed decision about your franchise investment is the first step toward building a sustainable business.
When a franchisor considers you to be a viable candidate for a franchise, it will provide you with two main legal documents: its Franchise Disclosure Document (FDD) and its standard franchise agreement. The FDD is required by law; and, despite detailed disclosure requirements, franchisors often succeed in providing surprisingly little valuable information to prospective franchisees. The franchise agreement is the document that will govern your relationship with the franchisor, and franchise agreements are almost universally heavily one-sided in favor of the franchisor. While some states have franchise relationship laws that provide limited protections to franchisees, as a franchisee, you need to understand that the vast majority (if not all) of in your franchise agreement will be legally binding.
Three Tiers of Franchise Business Review Services
When considering a franchise, it is important to have the FDD and franchise agreement reviewed by an experienced franchise attorney. You need to be aware of the pitfalls involved, and you need to make your buying decision based on an unbiased assessment of the franchisor and its franchise opportunity. It may be necessary to negotiate key provisions of the franchise agreement to mitigate your financial risk as well; and, in order to do so, you will need experienced legal representation.
We offer three tiers of flat-fee franchise business review services for prospective franchisees. All reviews are conducted by Jeffrey M. Goldstein, a franchise lawyer who has over 30 years’ experience exclusively representing franchisees and dealers. Our flat-fee services include:
- Fundamental Review of FDD and Franchise Agreement
- Detailed Review of FDD and Franchise Agreement
- Detailed Review of FDD and Franchise Agreement with Negotiation
Learn more about each of these services.
Understanding Your Franchise Opportunity: FDD vs. Franchise Agreement
If the franchise agreement governs your franchise, why do you need to know what is in the FDD? Actually, there are several reasons. A properly-prepared FDD should provide reliable information about the franchisor’s credentials, the financial aspects of the franchise, franchisee renewals and terminations, and other material information about the franchise opportunity. Overlooking the FDD is a mistake, and it is one that leaves many franchisees shaking their heads down the line.
Learn more about the key aspects of the FDD and franchise agreement.
Get Started with a Free Consultation
For more information about the risks involved in buying a franchise or our fixed-fee services for prospective franchisees, please contact us for a complimentary initial consultation. With offices in Washington D.C., we represent individuals and groups nationwide. To discuss your franchise opportunity with attorney Jeffrey M. Goldstein, please call (202) 293-3947 or inquire online now.