Buyers Should be Wary of Franchise Growth Estimates
Although the entertainment industry may be unique in many ways, it still operates under franchise law concepts applicable to any industry. In any industry, a prospective franchise buyer should be wary of overly confident valuations, or unsupported estimates of future growth and profitability.
A recent example is the release by Warner Bros. of “Batman v. Superman: Dawn of Justice.” The producers apparently bet heavily on the movie’s ability to spawn a franchise, as its $400 million production and marketing budget gives it the dubious distinction of being one of the most expensive movies of all time. By one projection, producers hoped for a franchise of two new movie releases per year for the next five years. Yet reviews of the movie have been unfavorable, and a poor opening weekend could prove fatal to the entire investment.
Is there a lesson to be learned from this risky venture? Absolutely. Our law firm offers a comprehensive range of services to franchisees, including advice on finding a franchise that will suit a prospective owner’s specific needs and business goals.