If you’re getting serious about being your own boss, which in your case means buying a particular franchise, you’re going to need to hire a franchise attorney.
In this instance, “serious” means you:
- Have had several conversations with the franchise development representative at headquarters
- Know what your role as a franchisee 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 headquarters
- Are pretty confident about your chances of success
So read on.
3 Reasons 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 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 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.
2. You were told you don’t need an attorney.
Sometimes, a franchise development representative or a franchise consultant tells you something like this:
“You’re welcome to hire your own lawyer, but the Franchise Agreement is the Franchise Agreement. It’s not like it’s negotiable.”
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.
*Franchise development representatives (salespeople) and franchise consultants (brokers) do have skin in the game. That’s because the franchisor pays them a commission if you sign the Agreement and send in a check for the Franchise Fee.
That said, the good ones encourage you to hire a franchise lawyer. Period. But there’s something else.
Can A Franchise Agreement Be Negotiated?
I’m going to share a secret with you. (Shhhh!)
“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?
Hire a franchise lawyer, even if someone tells you that “you don’t need to spend the 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 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?