In becoming a franchisee, you are about to invest a large portion of your valuable time and money as a new business owner. Therefore, you should make sure that you are doing everything possible to fully understand the deal before you invest. In order to do this successfully, it is highly recommended that you hire an attorney specializing in franchise law.
Why Hire a Franchise Attorney?
As you make such a huge commitment, it is imperative that you understand all of the terms in all of the documentation up front. Your franchise attorney can be very valuable in this endeavor, as he or she is an expert in that field. You should not hire a general attorney with no franchising experience because that attorney may not be aware of all the specifics involved.
Your franchise attorney may assist you in your comprehension of the first document that you receive from the franchisor, the Uniform Franchise Offering Circular (UFOC) or soon to be called Franchise Disclosure Document (FDD). This very lengthy and detailed document will highlight a variety of information about the franchise including any lawsuits or bankruptcies it has experienced.
As you go further along into the deal, you will receive a franchise agreement for your review. The franchise attorney will help you decipher the agreement, which explains the rights and obligations of both parties. The agreement, as written by the franchisor's attorney, may appear a bit slanted on the side of the franchisor. Therefore, your attorney can advise you regarding the fairness of the agreement as compared to others. He or she can possibly negotiate better terms on your behalf. The attorney probably possesses the experience to know what terms the franchisor may be likely to adjust.
Furthermore, the franchise attorney can be quite effective in assisting you with other issues. He or she can help you create your business entity, such as a sole proprietorship or partnership. The attorney can review and negotiate leases as well as offer advice on other legal business matters.
How to Hire a Franchise Attorney
The best way to begin looking for a franchise attorney is to ask around. If you know another franchisee, you may want to inquire as to who he or she hired. Also, asking other business professionals such as accountants or general lawyers may help you find a qualified professional. Another option is to contact the American Bar Association for a referral.
It is best to obtain at least two referrals so that you can compare attorneys. Find out about their experiences and track records with other franchise clients. You will also want to inquire about their fee schedule.
Due Diligence
Unfortunately you might come across some franchises that may not be legitimate. As you perform your due diligence in thoroughly investigating an opportunity with the assistance of your franchise attorney, you are much more likely to enjoy success as a franchisee.
