When you’re buying a franchise, you can either:
A. Use the best resources available to help you lower your $$$$ risk
B. Try figuring it all out on your own
There is no “C.”
There are all sorts of resources available for today’s prospective franchise owners. It’s stupid not to use them.
Some of them are free…some are not.
Some are great. Some are average at best…even weak.
With all the choices out there today-because of the internet, you do have to be careful. Don’t choose just any resource.
Tip: Before choosing a resource, do a search on Google, YAHOO! or Duck Duck Go to see if there’s anything negative about the person or the company you’re thinking of using. One simple way to do it is by typing in the name of the resource followed by the word “scams,” or something similar. “Lawsuits” or “legal problems” are also good search terms to use.
You can try this technique right now. Go to your favorite search engine and type in “Franchise Scams.” But, please don’t forget to come back, because I’m going to share a few things about why some people don’t feel they need to hire a franchise lawyer before they sign a 35-page franchise contract.
A Franchise Lawyer Should Have Your Best Interests At Heart
In my capacity as a franchise ownership advisor, I’ve been able to help a lot of people increase their chances of success as franchise owners.
But, here’s the thing; I’ve only been able to do so with clients that listened to my suggestions and used them in their pursuit of the best franchise opportunities around. Believe it not, some people like to do their own thing.
“Surround yourself with good people. People who are going to be honest with you and look out for your best interests.”
5 Stupid Reasons For NOT Using A Franchise Lawyer When Buying A Franchise
If you’re smart enough to hire a franchise lawyer to look over all of the documentation you’ll be receiving as a prospective franchise owner, including the actual franchise agreement, (contract) it’s pretty safe to assume (since you’re paying for legal advice and counsel) your lawyer will have your best interests at heart.
But, you have to be willing to crack out your checkbook. This is not the time to be cheap.
However, this is the time to check out some (5) stupid reasons for not using…for not hiring a franchise lawyer before you buy a franchise.
Here they are.
1. The MBA Reason
I’ve worked with a lot of people that have MBA’s.
Some of them are not only smart…and business-savvy, they’re realistic about the things they know and the things they don’t. But, some of them…well…
“I don’t need to hire a franchise lawyer. I have an MBA, and I know a lot about business. I’ve also read and studied lots of legal documents. Reading a franchise document and a franchise contract isn’t rocket science. I’m sure I’ll be able to figure it out.”
2. The CEO Reason
I work with a lot of CEO’s…ex-CEO’s actually. CEO’s that have lost their jobs and are “moving on to their next life adventure.”
Some of my best interactions have been with former company CEO’s and former company presidents. A lot of them now run very successful franchise businesses. But, a few of them have wanted to do their own thing.
“I ran a $30 million company, Joel. I know how to read balance sheets, I’ve negotiated multi-million dollar deals, and I certainly know how to read a contract. I really don’t feel that I’ll need a franchise attorney to help me figure a lot of this out.”
“People are getting smarter nowadays; they are letting lawyers, instead of their conscience, be their guide.”
– Will Rogers
3. The Carved In Stone Reason
I’ve worked with a good number of clients who have told me the following when it came to franchise agreements…
“I don’t see a reason to spend the money on hiring a franchise lawyer, Joel. it’s not like the franchise contract is negotiable. I’ve heard that franchise contracts are set in stone, anyway.”
Not true, according to franchise development expert Michael Seid, who says that some things may be negotiable in your franchise agreement.
- The payment terms of your initial franchise fee
- The size of your protected territory
- Additional start-up training for you and your staff
- Additional field and other support for your grand opening
- Your ability to sell your franchise to another franchisee without incurring the standard transfer fees
- The franchisor’s right to buy your location if you put it up for sale
- The standard cure periods if the franchisor finds you in violation of the agreement or standards of operation
- Elimination of the personal guarantees found in most franchise agreements.
Read Michael’s great article on the topic of negotiating franchise agreements, here.
4. The Next-Door Neighbor Reason
I’ve heard this one-or something pretty similar, many a time.
“My next-door neighbor is a big-time attorney. He’s told me on many occasions that he’d offer his best legal advice if I ever needed it…on anything. So, instead of spending my money on a franchise attorney, I’m going to show my neighbor the FDD and the contract. I’m sure he’ll be able to figure it out and advise me on what to do. I need to watch my money now.”
Franchise Tip: If your neighbor happens to be a lawyer, make sure he or she is a franchise lawyer. Franchise law is not only complicated…and always changing, it’s different in every state. Using the free legal services of your neighbor may sound good, but it may end up costing you more in the long run.
5. The Accountant Reason
Although the following statement may be obvious to you, I’m going to share it with you anyway.
An accountant isn’t a lawyer.
“Joel, I’m working with my accountant on this. He’s been around for a long time. He has several clients that own franchises. He told me he’s looked over dozens of franchise contracts and FDD’s and they’re all pretty similar. I trust him. I don’t see the need to spend money on something I don’t really need.”
Except that an accountant isn’t a franchise lawyer. Big diff.
So here’s what I say to those who don’t feel they need to use a great legal resource like a franchise lawyer, when they’re about to buy a franchise.
Go ahead. Screw things up for yourself just to save some money.