Oct 3, 2022 - Blog, Franchise Articles by |

If you are thinking about buying a franchise and trying to manage your upfront costs, you may be on the fence about hiring a franchise lawyer. You don’t want to pay for any services you don’t truly need, and you aren’t sure if hiring a lawyer to review the Franchise Disclosure Document (FDD) and franchise agreement falls into this category.

So, is it worth hiring a franchise lawyer?

The simple answer to this question is “Yes,” and there are several reasons why. Here is an overview of five reasons why it is worth hiring a franchise lawyer before you commit to a long-term franchise relationship:

5 Reasons Why It Is Worth Hiring a Franchise Lawyer Up Front

1. You Need To Know All of the Costs Involved in Franchise Ownership

At this point, you probably know the franchisor’s initial franchise fee and royalty fee, and you may have an idea of your overall estimated initial investment. But do you know all of the costs you will incur as a franchisee? Franchisors typically charge a variety of initial and ongoing costs, and they can impose mandatory third-party expenditures (including purchases from designated suppliers) as well. When you hire a lawyer, your lawyer will examine the franchise agreement to identify all of the provisions that have financial implications—whether now or in the future.

2. You Need to Know If the Franchisor’s FDD is Legally Compliant

All FDDs must comply with the U.S. Federal Trade Commission’s (FTC) Franchise Rule, and many states impose disclosure requirements as well. As a prospective franchisee, it is important to know whether your franchisor’s FDD is legally compliant. It should be—and if it isn’t, this could be a sign that the franchisor is cutting corners in other areas as well.

3. You Need to Read Between the Lines

When reviewing an FDD, understanding what is missing is just as important as understanding what is in the document. An experienced franchise lawyer will be able to read between the lines and advise you of any omissions that have important implications for your proposed franchise opportunity.

4. You Need to Know What You Are Signing

Along with understanding what is (and isn’t) in the FDD, you also need to have a crystal clear understanding of what is (and isn’t) in the franchise agreement. This is the main document that you will be signing, and it will govern virtually all aspects of your relationship with the franchisor. Understanding the franchise agreement’s complex legal language requires experienced legal representation.

5. You Need to Negotiate Any Unreasonable Franchise Agreement Terms

Finally, in most cases, prospective franchisees will need to negotiate their franchise agreements in order to secure reasonable protections. An experienced franchise lawyer can help you decide which provisions to negotiate, and, if desired, your lawyer can negotiate on your behalf.

Contact Us To Get Started with a Free Consultation

Are you thinking about buying a franchise? If so, we encourage you to inquire about our fixed-fee Franchise Business Reviews. To get started with a free consultation, please call 202-293-3947 or inquire online today.

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