If You’re Buying a Franchise, Having the Right Attorney Is Crucial

Purchasing a franchise is an important decision. People will use their life savings, a home equity loan or borrow money from family members to fund the franchise. Despite the success of franchising there are risks. The Franchise Disclosure Document  (“FDD”) and franchise agreement include a number of documents such as a personal guaranty and non compete that have serious implications for a franchisee that fails.

Many of the provisions in today’s franchise agreements are based upon recent franchise litigation and judicial decisions. As a result franchisor attorney’s seek to make the franchisor agreement as resistant to successful franchisee litigation as possible. In addition, since franchisors conduct their business over a large geographic area they are encouraged to use a franchise agreement that favors the franchisor. Since most attorneys focus on different areas of the law, it’s important that franchisees use an attorney that fully understands franchise law. There is a great deal of franchise information on the Internet and this information can be used to gain a fundamental understanding of franchising but it can’t take the place of a franchise attorney. Despite the advice and urgings from franchise experts and industry associations, every day individuals will purchase a franchise without using a franchise attorney, Here are the reasons why you shouldn’t go it alone or use just any attorney.

                                                     The Reasons for Using a Franchise Attorney:

  • Franchise law is complex and requires an expertise that a non-franchise attorney may not have.
  • A franchise attorney knows the warning signs to look for in the FDD.
  • There are particular provisions in franchise agreements that are unique to contract law.
  • A franchise attorney will know what sections in the franchise agreement to focus on.
  • A franchise attorney has the experience and is usually more qualified to negotiate changes to your franchise agreement compared to other attorneys.
  • You can protect yourself from future problems.
  • Since franchisors are represented by franchise attorneys you want your attorney to understand and speak the same language.
  • The cost of a franchise attorney will represent a small portion of your total franchise investment.

Before you sign a franchise agreement, pay the franchise fee and make the commitment to your new franchise business be sure that a franchise attorney is guiding you. It’s an investment you need to make.

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