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The services of a competent franchise lawyer can go a long way in helping you secure your future as the owner of a franchise.
In this post, I’m going to share three things a good franchise attorney can do for you-and your franchise business.
About Franchise Lawyers
Simply put, a franchise lawyer, or franchise attorney, is a lawyer who has a deep knowledge of franchising.
A good franchise attorney is active in the franchise space and stays up to date on the frequent changes and updates concerning franchise law. In addition, almost every franchise lawyer I’ve dealt with represents both prospective franchisees, current franchisees, and franchisors.
This May Come Up
Before I tell you just how much a good franchise lawyer can help you, I need to share something that my clients have heard franchise salespeople tell them more times than I care to count: “You don’t really need to hire a franchise lawyer, because nothing in our franchise agreement is negotiable.”
Now, here’s what I tell my clients when they’re told that:
It doesn’t matter, even if the franchise agreement is ‘non-negotiable.’ What matters is that you have a thorough understanding of the agreement, and for your attorney to make sure there aren’t any red flags. As to whether or not the agreement is negotiable, my experience tells me that it depends on the situation. Let’s leave it at that.
The bottom line? Understand that the main role of the lawyer you hire is to protect your interests.
3 Things Franchise Lawyers Can Help You With
If you’re buying a franchise, here are three things a skilled franchise lawyer can help you with.
1. Franchise lawyers thoroughly read Franchise Disclosure Documents/Franchise Agreements.
While I (strongly) encourage you to read the franchise documents you receive, nothing beats having someone who’s accustomed to reading them do just that. And that’s where a franchise lawyer comes in.
It’s a fact that franchise lawyers read a lot of Franchise Disclosure Documents (FDDs). But did you know that a fair amount of today’s franchise attorneys write them, too? That said, it’s a good bet that an experienced franchise lawyer knows what to look for.
To summarize, when you hire an attorney, expect to get her opinion on the FDD and the franchise agreement, along with specific guidance and counsel geared to your unique situation.
2. Franchise lawyers can help you determine the best business entity for your franchise.
As I pointed out earlier, job #1 of a franchise attorney is to protect your interests.
One specific way they do that is by providing counsel and advice on the proper entity for your franchise business. For instance, should you set up your franchise as a Sole Proprietorship, Corporation, S-Corp, or Limited Liability Company (LLC)?
Experience tells me that operating your franchise business under the right entity can go a long way towards protecting you and your interests should any legal matters present themselves while you’re operating your business.
3. Your franchise lawyer can help you negotiate your commercial lease.
If you're buying a franchise that will need a physical location, a franchise lawyer will be invaluable to you. Without exception, commercial leases are complicated documents. Not only that, they’re extremely landlord friendly.
In view of that, and the fact that a commercial lease is a multi-year financial (and legal) obligation, it’s incumbent upon you to make sure you have a complete understanding of your obligations under the lease. A competent franchise lawyer who’s familiar with commercial leases can help you navigate your lease and potentially negotiate better terms.
As has been noted, a good franchise attorney can provide guidance and counsel on your potential purchase of a franchise business.
But more than any reason I could give to hire a franchise lawyer when buying a franchise: I can’t think of a single reason to not hire one.
The Franchise King®, Joel Libava, is a top franchise expert. He’s written over 2,000 different articles on franchise ownership and personally consults with people who are looking to buy a profitable franchise. Go here to find out how The Franchise King® can help you become your own boss.
Originally published on August 5, 2020.