Dallas Franchise Law
Buying a franchise is a long-term investment, and one that comes with lots of strings attached. While franchisees own and operate their own businesses, in most systems they are far from independent, with royalty fees, advertising fees, supplier controls, and branding requirements all maintaining close ties between the franchisee and the franchisor.
Yet, in some ways, franchisees often find themselves more on their own than they expected – and perhaps even more than they desired. Despite the fact that franchisors often advertise extensive initial training programs and ongoing operational support, many franchisees quickly discover that they need to lower their expectations once they sign on the dotted line.
If you own a franchise in Dallas, or if you are thinking about buying a franchise in the Dallas area, it is important to understand the nature of the franchise relationship and how franchise laws protect you. From negotiating the terms of their franchise agreements to initiating arbitration or litigation, there are a number of steps franchisees can take to protect their rights with the help of an experienced attorney.
Dallas, TX Franchisee FAQs
Q: How does franchising work?
A franchise is a contractual relationship between two parties. The franchisor grants the franchisee the right to operate a business using its trademarks and proprietary business methods, and in exchange the franchisee agrees to pay an initial franchise fee and ongoing royalties, and to comply with the strict terms and conditions of the franchisor’s franchise agreement.
Q: What does a franchisor do?
This is a tricky question. In broad terms, the franchisor’s role is to protect its trademarks and manage the franchise system for the benefit of its franchisees. Practically speaking, however, what a franchisor actually “does” for its franchisee varies greatly from one franchise system to the next. Some franchisors provide valuable operational support, while others do the bare minimum to meet their already-minimal franchise agreement obligations.
Q: Why is franchising a good idea?
Buying a franchise may be a good idea if you want to own your own business but you are also interested in instant brand recognition and the backing of a tested business strategy. However, as we mentioned above, these benefits come with a cost, and not all franchises are created equal.
Q: Why is franchising a bad idea?
The greatest risks of buying a franchise arise out of the franchisor’s extreme leverage in forming the franchise relationship. Even if you are able to negotiate certain key provisions of your franchise agreement, your agreement will still be extremely one-sided and provide the franchisor with numerous opportunities to both enforce your financial obligations and terminate your franchise rights.
Q: What are some “do’s and don’ts” for franchisees?
If you are in the process of evaluating franchise opportunities, performing your due diligence and having a franchise lawyer review the Franchise Disclosure Document (FDD) and franchise agreement are necessities. If you already own a franchise and are facing a potential dispute with your franchisor, you need to understand the dispute resolution provisions of your franchise agreement, and you need to avoid making mistakes that could jeopardize your franchise rights.
Goldstein Law Firm | Franchise Lawyer for Dallas, TX Franchisees
If you would like more information about the legal aspects of buying a franchise or facing a dispute with your franchisor, you can contact the Goldstein Law Firm for a free consultation. To speak with franchise lawyer Jeffrey M. Goldstein in confidence, please call (202) 293-3947 or request an appointment online today.