According to Franchise Direct, the pet franchise industry is growing rapidly. With pet owners spending around $70 billion annually, buying into a pet-related franchise may seem like a smart investment. But, whether you are interested in opening a brick-and-mortar “pet hotel” or retail outlet, operating a mobile pet grooming franchise, or walking dogs in your local neighborhood, there are some important legal factors to consider, and rushing into a franchise opportunity could prove to be a costly mistake.
Important Legal Considerations for Purchasing a Pet-Related Franchise
Before you buy a pet-related franchise, here are some important legal considerations to keep in mind:
1. Liability to Clients
If you will be providing training, walking, grooming, or hospitality services, what are your responsibilities while you have custody of your clients’ pets? What if an animal gets sick while in your care; or, what if one client’s pet attacks another’s? While your franchisor should provide guidance for addressing these types of issues, do not expect your franchisor to assume liability if your franchise gets sued. This is true even if an animal gets sick or injured to your use of franchisor-mandated products or supplies.
2. Liability to Others
In a similar vein, what happens if a client’s pet attacks someone else? For example, what if a client’s dog escapes off-leash or you lose control of a dog during a walk, and the dog bites a passer-by? Once again, your franchisor is not going to assume responsibility; so, should you? Are you prepared to face legal battles with your clients if they accuse you of maintaining inadequate control over their pets? While buying the right type of insurance can help you avoid liability, these are potential issues that can damage your franchise’s reputation and take time away from managing your business.
3. Franchise-Related Concerns
Aside from these types of liability issues, buying a pet-related franchise presents a number of other legal concerns as well. This includes many concerns that are common within the franchising industry – although specific issues will vary from one franchise system to the next. For example, before signing a franchise agreement, it will be important to critically assess (and potentially negotiate) the franchise agreement’s provisions related to:
- Initial Term and Renewal – Does the initial term give you enough time to build a profitable business? When it comes time to renew, will the renewal conditions give the franchisor discretion over whether to extent the term of your agreement?
- Indemnification – In certain circumstances, it can make sense for a franchisor to assume liability for franchise-related claims. But, don’t expect your franchisor to assume this liability voluntarily. By negotiating your franchise agreement’s indemnification clause, you may be ability to mitigate your risk of liability related to franchise operating standards and specifications.
- System Standards and Modifications – If the franchisor makes changes to the system, will you be forced to comply (even if you are satisfied with your current business model) – and will you have to do so at your expense? This is a common requirement in franchise agreements.
Contact National Franchise Attorney Jeffrey M. Goldstein
If you are thinking about buying a pet-related franchise, we encourage you to inquire about our flat-fee franchise review services. To speak with franchise attorney Jeffrey M. Goldstein, call 202-293-3947 or request an initial consultation online today.