Why You Need a Franchisee Lawyer
Whether you are thinking about buying a franchise or facing a dispute with your franchisor, you need to rely on an experienced attorney’s advice. Specifically, you need to rely on the advice of a franchisee law firm who has significant experience representing prospective and active franchisees.
Just as owning a franchise is unique from owning an independent business, the legal issues in franchising are unique from those in any other area of the law. The Federal Trade Commission (FTC) Franchise Rule governs franchisors’ disclosures at the national level. Many states have adopted franchise registration and disclosure laws, and there is a substantial body of case law surrounding franchisees’ rights (or the lack thereof). Franchise agreements are complex contracts with many provisions that do not appear in other types of agreements. To make sense of it all and to ensure that you are making informed decisions, you need an experienced franchise lawyer on your side.
10 Reasons Why You Need to Hire Experienced Franchisee Lawyers
Are you considering franchise opportunities? Are you struggling to pay your royalties or facing other challenges as a franchisee? Do you have questions about how to protect your franchise investment? If you answered “Yes” to any of these questions, here are 10 reasons why you should speak with a franchisee attorney:
1. The Franchise Relationship is Unique
One of the main reasons you need a franchisee attorney – and not just any business lawyer – is that the franchise relationship is unique. From the legal principles that govern the relationship to the fundamental nature of the relationship itself, as a franchisee, your relationship with your franchisor is unlike any other. When buying a franchise or assessing your legal options as a franchisee, you need to be able to rely on the advice of an attorney who has a comprehensive understanding of all of the various legal, practical and financial dynamics involved.
2. The Franchise Relationship is Long-Term
Most franchise agreements have an initial term of anywhere from two to 10 years. Even on the low end, this is a long time to run a business under the umbrella of a franchise system. With this in mind, going into the franchise relationship, you need to feel confident that you have done what is necessary to succeed during the initial term (and ideally secure a renewal term as well). It will take a while – perhaps several years – to recoup your investment, so you need to start on solid ground.
3. If You Lose Your Franchise, You Could Also Lose Much More
While the franchise relationship is long-term, it can also end abruptly if you do not adhere to your franchise agreement’s terms. If your franchisor terminates your franchise agreement, not only will you lose your franchise, but you will also lose much more. Your investment will be gone, and you may have an obligation to pay “lost future royalties.” Your customer list will belong to your franchisor, and you will likely be subject to competitive restrictions that prohibit you from opening a similar business in your geographic area for several years.
4. Most Standard Franchise Agreements are Extremely Franchisor-Friendly
Franchisors control the franchise relationship. They know that their franchises are in demand, and they know that they can get away with imposing heavily one-sided terms in the vast majority of cases. To protect yourself, you need a lawyer who understands your rights and how to use them to your advantage.
5. Many Court Decisions Have Favored Franchisors’ Rights as Well
Not only are franchise agreements heavily one-sided, but many court decisions handed down in the world of franchising have favored franchisors’ rights as well. With that said, the courts have also tended to favor franchisees on certain issues, and an experienced franchisee law firm will know how and when the law protects you.
6. As a Prospective or Current Franchisee, You Can (and Should) Negotiate to Protect Yourself
Many people assume – because you will often hear – that franchise agreements are non-negotiable. However, this is absolutely not true. With the help of an experienced franchise lawyer, you can negotiate protections into your franchise agreement before you buy it. If you are facing a dispute with your franchisor, an experienced franchise attorney can help you work toward negotiating a favorable resolution that protects your investment.
7. You Need Insights Gained from Experience Within the Franchise Industry
Whether you are venturing into the world of franchising or you are a seasoned franchise owner, when it comes to legal advice, you need your attorney to offer insights gained from experience within the franchise industry. Franchising is truly a world of its own, and a lawyer who is on the outside looking in will not be able to offer the same advice as an attorney who has been representing franchisees for decades.
8. You Need to Know that You are Making Informed Decisions
When making decisions about buying a franchise or resolving challenges as a franchisee, you need to know that you are making informed decisions. If your lawyer lacks relevant experience, you will not feel confident relying on his or her advice.
9. Every Franchise System is Different
No two franchise systems are exactly alike. An attorney who has represented one or two franchisees might think he or she has a clear understanding of the franchise relationship. Still, the reality is that his or her limited experience is nowhere near sufficient to provide a clear understanding of the legal issues in franchising and how the challenges franchisees face can vary from one franchise system to the next.
10. Every Franchise is Different
On this same token, no two franchisees are exactly alike, either. While franchisees within the same franchise systems will face many of the same challenges, each individual franchisee needs custom-tailored legal advice that addresses that franchisee’s specific risks and concerns. To protect yourself as a franchisee, you need a franchise attorney who can use his or her broad experience in franchising to advise you based on your individual circumstances.
When Should You Consider Hiring a Franchisee Law Firm?
As a franchisee or dealer (or a potential franchisee or dealer), there are a number of different situations where it makes sense to seek the advice of an experienced attorney. At the Goldstein Law Firm, we are regularly asked to provide advice and representation for matters such as:
- Review of Franchise Disclosure Documents (FDDs) and franchise agreements
- Purchase and sale of existing franchises and dealerships
- Dealing with franchise terminations and renewals
- Litigation with franchisors and other franchise-related disputes
- Formation of dealer groups and franchisee associations
These are all common scenarios where franchisees and dealers need to be extremely careful to protect themselves and proactively address any issues that could lead to trouble down the line. This is where having an experienced franchise attorney comes into play.
How Do You Choose the Best Franchisee Attorney for Your Specific Needs?
These days, there are several law firms that bill themselves as “franchise law firms,” and many other firms offer advice for franchise-related matters while also representing clients in a wide range of other areas. But, if you need legal advice for a franchise or dealership, shouldn’t you hire a lawyer who focuses exclusively on the issues that matter to you?
Franchise laws are complicated and the issues that arise in franchise and dealership relationships can be even more nuanced and complex. To make sure you receive competent, unbiased legal representation, you should consider choosing a law firm that only represents franchisees and dealers.
Where Can You Find Accurate, Up-To-Date Information on the State and Federal Laws That Govern Franchise Relationships?
Even many franchise lawyers do not fully understand all of the complex laws and regulations that apply to the world of franchising. As a franchisee or dealer, it can be helpful to gain a general understanding of the laws that apply to your situation; but, there is no substitute for seeking the advice of a qualified franchise attorney.
What Does the Law Say About Franchisors’ Obligations to Their Franchisees and Dealers?
Franchise laws vary from state to state (and not all states have franchise laws), and your franchisors’ obligations will to a large extent be governed by the terms of your franchise agreement. If you would like advice about enforcing your franchisor’s legal obligations, we encourage you to contact us for a free, confidential consultation about the options that may be available.
Seek Advice From a Franchisee Law Firm With Over 30 Years of Experience
Franchise attorney Jeffrey M. Goldstein has over three decades of experience in franchise law, and he focuses his practice exclusively on representing franchisees and dealers. If you need franchise legal advice, call 202-293-3947 or submit our online form to request a free consultation with Mr. Goldstein today.