Jun 30, 2021 - Blog, Franchise Articles by |

If you are thinking about buying a franchise, obtaining a franchise business review is an important part of the process. Getting advice from an experienced franchise lawyer allows you to make informed decisions; and, while you may want your lawyer to provide a “seal of approval” for your chosen franchise opportunity, the true goal is to get unbiased legal advice focused on your long-term best interests.

5 Reasons Why All Prospective Franchisees Need Franchise Business Reviews

Here are five reasons to get a franchise business review regardless of whether you are a first-time buyer or an experienced franchisee:

1. All 23 Items of the Franchise Disclosure Document (FDD) Contain Important Information

When buying a franchise, all 23 Items of the FDD contain information you need to know. While most prospective franchisees focus on Items 5, 6 and 7 (which cover fees and the initial investment), franchise lawyers will examine the entire FDD for key insights into the strength of the franchise system and the viability of the franchise opportunity.

2. You Also Need to Know What Isn’t in the FDD

In addition to knowing what is in the FDD, you also need to know what is not. Has the franchisor omitted material information (potentially in violation of its disclosure violations)? Is the franchisor making any “negative disclosures”? If so, what does this mean for you? When you get a comprehensive franchise business review from an experienced franchise lawyer, you will learn what you need to know that you can’t find in the FDD itself.

3. The Franchise Agreement is a Complex Legal Document with Significant Implications

As part of a comprehensive franchise business review, your lawyer should also carefully examine the material terms of the franchise agreement. Do you have a “minimum royalty” obligation? What are the conditions for renewal? What issues can lead to the termination of your franchise? What does the franchise agreement say about insurance and indemnification? These are all critically important questions—and the answers will tell you whether you need to try to negotiate the agreement.

4. Once You Sign the Franchise Agreement, You are in it for the Long Haul

A franchise agreement is a long-term commitment. Once you sign, there is no going back. As a result, before you sign, you need to be as certain as you can that you have a reasonable chance of success.

5. An Experienced Franchise Lawyer Will Be Able to Compare Your Chosen Franchise Against Industry Standards

Finally, in addition to reviewing your chosen franchisor’s disclosures and advising you regarding the terms of the franchise agreement, an experienced franchise lawyer will also be able to compare the franchise opportunity as a whole against industry standards. Are the royalty rates competitive? Is the franchisor asserting reasonable controls? Has the franchisor struggled to sell units while its competitors have expanded? Again, these are all important questions that you cannot afford to leave unanswered.

Inquire about Our Fixed-Fee Franchise Business Reviews for Prospective Franchisees

We provide four tiers of fixed-fee franchise business review programs for prospective franchisees. To learn about your options, call 202-293-3947 or contact us online for a free consultation.

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