Joel LibavaYesterday, I brought up something to watch out for, when investing in a franchise of your own.
Here is another thing to be careful of…….
Lawsuits!
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Litigation. Lots of litigation. Here is the definition of litigation:
The process of carrying out a lawsuit; a civil action in which a controversy is brought before the court.
That certainly sounds pleasant. The definition is just a short series of words.The reality of actually being in a courtroom, probably is a little more intense.
There are 23 items that are required to at least be listed in the franchise company’s Uniform Franchise Offering Circular {UFOC}.
The 23 { Thank you, Franchise 411!}
The 23 with updates! {Thank you, Nixon-Peabody LLP}
One of these items has to do with current and past litigation. It could be franchise company initiated, or franchisee initiated. In the past year year or so, a couple of franchise companies have been in the news, because of large amounts of lawsuits. Sean Kelley discusses the highly publicized Quizno’s lawsuits on his blog, Franchise Pick. Blue Mau Mau reports on Coffee Beanery. The Franchise Pundit discusses a UPS Store lawsuit.
Bottom line is that in business, lawsuits sometimes happen. Just because Quizno’s, The Coffee Beanery, and The UPS Store are involved in litigation, does not mean that any of the three opportunities could not be right for you. Just make sure you use an attorney familiar with franchise law, when you are getting serious about investing in a opportunity. I always tell my candidates that there should never be a lot of litigation. If there is, see if you can detect a pattern. In most cases, if there is a lot of litigation, the current and past franchisees are aware, and may know the real dirt. Ask them.
Tomorrow, the 3rd issue to beware of, when investing in a franchise of your own…….
About the Author
Joel Libava is The Franchise King® — an independent franchise advisor with 25+ years in the industry, two published books on franchising, and his writing has been featured in The New York Times, Forbes, CNBC, Entrepreneur® Magazine and others. In addition, he wrote exclusively for the U.S. Small Business Administration blog for eight years. He doesn't sell franchises. Instead, Joel helps you figure out if franchise ownership is actually right for you — and if it is, teaches you his powerful, proven-to-work franchise research techniques, so you can make a smart, informed decision on a franchise to own and be your own boss.
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