You’ve decided to leave your job to buy a franchise. You’ve assessed your finances, you’ve decided on a particular franchise opportunity and now you are ready to buy. How do you move forward? Once you sign the franchise agreement, what can you expect as a franchisee? The franchisee lawyers at Goldstein Law Firm explain.
The 5 Steps of Buying a Franchise
Broadly speaking, we can break down the franchise buying process into five key steps: (i) completing your due diligence, (ii) reviewing the franchise agreement, (iii) negotiating the franchise agreement, (iv) signing the franchise agreement, and (v) preparing to open for business.
1. Completing Your Due Diligence
As we discussed at the end of Part 2 of this series, due diligence is a critical component of the franchise buying process. While much of your due diligence as a prospective franchisee will be devoted to choosing between franchise opportunities, even once you choose, you still have work to do. At this point, you should be focused on digging as deep into the franchise opportunity as possible—and you should still be prepared to back out if you discover something undesirable or unexpected.
2. Reviewing the Franchise Agreement
You will need to hire a lawyer to review the franchise agreement. While lots of lawyers claim to be “franchisee lawyers,” relatively few actually have significant experience representing prospective franchisees. Once you choose a lawyer, your lawyer will review the franchise agreement in detail and explain everything you need to know before you sign.
3. Negotiating the Franchise Agreement
In many cases, it will make sense to try to negotiate your franchise agreement with the franchisor. Most franchise agreements contain numerous one-sided provisions; and, as a prospective franchisee, you need to do the best you can to secure reasonable protections. Your lawyer can help you decide which provisions to negotiate, and represent you in your negotiations if desired.
4. Signing the Franchise Agreement
Once you are ready, it is time to sign. If you negotiated your franchise agreement, you will want to make sure the version the franchisor sends for signature includes your negotiated provisions. Assuming it does, and assuming you are prepared to move forward, you can sign—and at this point, you will officially become a franchisee.
5. Preparing to Open for Business
Now, the real work begins. You will need to get to work promptly doing everything that is necessary to get your franchise open on time (franchise agreements commonly include opening deadlines). Depending on the nature of your franchise, this could include everything from selecting a site and negotiating a lease to purchasing branded marketing materials and supplies. Here, too, diligence is key, as you will want to make sure you are doing everything you can to set yourself up for success.
Contact the Franchisee Lawyers at Goldstein Law Firm
Are you thinking about making the transition from employee to franchisee? If so, our franchisee lawyers can help you get started on the right foot. To schedule a free initial consultation at Goldstein Law Firm, call 202-293-3947 or get in touch online today.
