(Sponsored Post on “Do You Need To Hire A Franchise Lawyer?”)
If you’re getting serious about being your own boss, which in your case means buying a particular franchise business, you need to hire a franchise lawyer for legal advice. Period. It’s not a “maybe I should,” or “only if I can afford it.” thing.
In this instance, the word “serious” means you:
- Have had several conversations with the franchise development representative at headquarters
- Know what your role as a franchise owner is going to be
- Have started to figure out how you’re going to fund your business
- Have talked with lots of existing franchisees
- Have visited franchise business headquarters
- Are pretty confident about your chances of success in the business
- Have the Franchise Disclosure Document
So read on.
Do You Need To Hire A Franchise Lawyer?
In this case, my answer is a resounding “yes.” And please don’t think that my ‘yes’ is because this is a post that’s paid for by a franchise lawyer. Far from it. That’s not how I roll.
Instead, my reason for saying yes has to do with what I do.
I specialize in helping people not lose money when they’re buying a franchise
One way I do that?
By telling my clients and readers they must hire a franchise attorney for legal advice before they move forward on the purchase of a franchise.
That said, check out my reasons for being so darn insistent on this.
3 Reasons Why You Need To Hire A Franchise Lawyer
What follows are 3 reasons why it’s crucial for you to hire a franchise attorney.
1. To understand potentially costly words.
The “costly” words I’m referring to are the ones that are scattered throughout the Franchise Disclosure Document (FDD) and the actual Franchise Agreement (contract). They include alarming words, phrases and sentences related to franchise law. Like these:
- Continuous direct access
- Independently access a franchisee’s entire computer
- Verify compliance
- The Franchisee’s responsibility
- Take reasonable steps
- The franchisor can refuse to renew a franchise
- Good cause
- You alone are responsible for complying with all applicable
- Within a defined geographic area
- Laws and regulations
- You will submit periodic reports, forms and records
- Liquidated Damages
- Renewal Fees
- You must comply
- We may require, as a condition of granting approval
- We have the right to approve or disapprove a proposed
- Binding agreement
- Termination of the Franchise Agreement
In short, the words above may be just “words” to you now, but when they’re part of a contract you’ll need to sign, they are so much more. It’s why you need legal advice.
2. You were told you don’t need a franchise lawyer.
Who Gave You That Advice?
Hold on! Who “told” you that? I want a name and a phone number. Kidding.
Actually, I’m not kidding.
I do want to know who would say something like that. Why?
Because they’re wrong.
Of course you need to hire a franchise attorney.
But wait. If someone does say that, if someone tells you that you don’t need a franchising lawyer, that person must have a reason for it.
With that in mind, I’d like you to watch a video I put together…it’s about the importance of hiring a franchise attorney. In addition…you’ll see.
A gentle tip from The Franchise King®:
Do not buy a franchise until you know EXACTLY how to do thorough research.
Learn how here
If you watched the video, you now know that sometimes franchise development representatives and/or franchise consultants tell you something like this:
“You’re welcome to hire your own franchise lawyer, but the Franchise Agreement is the Franchise Agreement. It’s not like it’s negotiable.”
Regardless if the franchise agreement is negotiable or not, let me make this perfectly clear…
You need to be protected by someone who’s on your side…who’s on your “team.” Like your attorney.
Simply put, the franchise attorney you hire works for you-not the franchisor. He gets paid the same whether you buy the franchise you’re interested in purchasing or not. In other words, he doesn’t have any skin* in the game. Instead, he’s there to give you legal advice about the business you may be about to invest in.
*Franchise development representatives (salespeople) and franchise consultants (brokers) do have skin in the game. That’s because the franchisor pays them a commission (they receive 40-50% of the Franchise Fee) if you sign the Agreement and send in the check.
That said, the good ones encourage you to hire an experienced franchise lawyer. Period. But there’s something else.
Can A Franchise Agreement (Contract) Be Negotiated?
I’m going to share a secret with you. (Shhhh!)
This secret comes from Charles Internicola, Franchise Lawyer:
“Franchise agreements are negotiable; however, each franchisor is different in terms of negotiating. It depends on the franchisors opinion and the requested changes. We like to understand the prospective franchisee’s individual and business goals and try to help align terms of the franchise agreement in a fair way. When modifying the franchise agreement, we focus on negotiating terms to provide the franchisee with more protection including getting a Protected Area, for example.”
The bottom line?
You need a franchise lawyer to give you legal advice, even if someone tells you that “you don’t need to spend your money on one.”
3. Franchise lawyers have been exposed to a barrage of unique franchising situations.
I’m going to go out on a limb and say that this is (probably) the first time you’ve bought a franchise. If indeed that is the case, wouldn’t you feel better about what you may be about to do if you got counsel from someone who’s “seen it all?”
Like an experienced franchise attorney who has seen* hundreds of different Franchise Agreements and Francise Disclosure Documents (FDD’s).
*A lot of experienced franchise attorney’s actually write FDD’s and Franchise Agreements.
So, are you going to hire a franchise attorney?