Joel Libava
As an aspiring franchisee, you may be about to invest $200,000 or more into your future. Congratulations! But you need to know something.
The franchisor who you’re about to partner with has high-level franchise attorneys protecting their interests. And hey, it’s just business. But, shouldn’t you have a great franchise attorney on your side, too?
Shouldn’t have the same high-level franchising legal guidance to protect your interests? Your money? Of course you should.
And that’s what this blog post is about.
Key Takeaways About Aspiring Franchisees Needing a Franchise Attorney by Their Side
You’re making one of the biggest financial decisions of your life, and the franchisor has structured everything—the FDD, the franchise agreement, the fee structure—to protect their interests first.
A franchise attorney working for you levels the playing field by translating complex legal documents into plain English that reveals what you’re actually buying. Including what risks you’re accepting, and what rights you’re giving up as a franchisee.
Breaking thing down, the real value isn’t just document review; it’s pattern recognition from someone who’s represented dozens or hundreds of franchisees.
For instance, a good franchise lawyer knows which red flags in Item 19 suggest unrealistic projections, which territory provisions leave you vulnerable to cannibalization, and which termination clauses are industry standard versus unreasonably one-sided.
In a nutshell, this expertise prevents you from discovering problems after you’ve already invested. When it’s too late.
Think of franchise legal counsel as due diligence insurance on a $200,000+ investment.
For a few thousand dollars (or maybe less, depending on the situation), you get an expert opinion of whether the opportunity matches what’s being promised, whether the terms give you a realistic path to profitability, and whether you’re protected if things go wrong.
That said, your attorney’s job isn’t to kill deals (although I’ve seen that happen). Instead, it’s to make sure you enter your Franchise Agreement with eyes wide open.
With those things in mind, here are the specifics on why aspiring franchisees like you need to hire a seasoned franchise attorney.
10 Reasons Why Aspiring Franchisees Need to Find And Hire a Great Franchise Attorney
1. The FDD Is Written to Protect the Franchisor, Not You
That 100+ page Franchise Disclosure Document?
It’s designed to meet the franchisor’s legal obligations and limit their liability. A franchise attorney translates what it really means for your investment, your territory, and your ability to make money.
Use The Franchise Attorney Directory to Find a Local Attorney
2. Item 19 Earnings Claims Need Expert Analysis
If the franchisor provides financial performance data, your attorney knows how to analyze what’s included, what’s suspiciously missing, and whether the numbers reflect units comparable to yours. If there’s no Item 19 at all, that may tell a story too.
Aspiring Franchisees: Take Note on Another Important Reason Why You Need a Good Franchise Attorney
3. Franchise Agreements Aren’t Negotiable—Except When They Are
Franchisors often claim their agreements are non-negotiable. Sometimes that’s true. Sometimes it’s not. But you won’t know until your franchise lawyer tries.
In fact, experienced franchise attorneys know which terms can realistically be negotiated and how to approach those conversations without torpedoing your relationship. And that’s important.
4. Territory Rights Determine Your Growth Potential
Your protected territory might look great on paper, That is until you understand the franchisor’s reserved rights to sell online, open company-owned locations nearby, or grant territory to other franchisees. Your attorney identifies what protection you actually have.
5. Renewal and Transfer Terms Affect Your Exit Strategy
Planning to sell your franchise in 10 years?
If so, your ability to do so, and capture that value, depends on transfer provisions, right of first refusal clauses, and renewal terms buried in the agreement. These clauses determine whether you’re building an asset or renting a job.
6. Hidden Costs Are Everywhere
Initial franchise fees are just the beginning.
Your attorney reviews required technology purchases, mandatory renovations, marketing fund contributions, and other ongoing costs that dramatically impact your actual investment and cash flow projections.
7. Supplier Restrictions May Limit Your Options
Many franchise agreements require you to purchase from approved suppliers, sometimes at prices higher than market rates.
With that fact in mind, if the franchisor receives rebates while you pay premium prices, your attorney ensures you understand the financial impact.
More Reasons Why Franchisees Need to Hire A Great Franchise Attorney
8. Termination Clauses Can Destroy Your Investment
Franchisors can terminate your agreement for various violations, some surprisingly minor.
An experienced franchise attorney explains what behaviors put your investment at risk and whether the termination process gives you reasonable protection or leaves you completely vulnerable.
9. Litigation History Can Reveal Red Flags
Item 3 of the FDD discloses litigation history.
Your attorney knows how to interpret this information, distinguishing between normal business disputes and patterns suggesting systemic problems with how the franchisor treats franchisees.
10. State Laws May Provide Additional Protection
Some states offer relationship laws that protect franchisees beyond federal requirements, regulating how terminations can happen, including things like requiring good cause for non-renewal, or mandating specific dispute resolution processes.
Your attorney can ensure you understand your rights in your specific jurisdiction. Again, it can vary by state.
The Bottom Line on Why Would-Be Franchisees Need a Seasoned Franchise Attorney
Franchisors invest heavily in legal counsel to protect their interests. And you’re investing a portion of your savings and your future.
As an aspiring franchisee, spending money on a franchise attorney who reviews your FDD, analyzes the agreement, and identifies risks isn’t an expense. It’s protection for a six-figure decision.
Remember, the franchisor’s attorney works for them.
You need someone working for you.
In this case, a seasoned franchise attorney.
About the Author
The Franchise King®, Joel Libava, is a leading franchise expert, author of "Become a Franchise Owner!" and "The Definitive Guide to Franchise Research." Featured in outlets like The New York Times, CNBC, and Franchise Direct, Joel’s no-nonsense approach as a trusted Franchise Ownership Advisor helps aspiring franchisees make smart, informed decisions in their journey to franchise ownership. He owns and operates this franchise blog.
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