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Use a Franchise Attorney When Investing in a Franchise

Published on June 21, 2017

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Every day, people like you purchase a franchise without the benefit of franchise counsel. This happens despite the warning in the Franchise Disclosure Document (FDD) to seek the advice of an attorney. Before you invest in a franchise and sign the franchise agreement, be sure to use a franchise attorney to guide you along the way.

Investing in a franchise may very well be the most important decision you’ll ever make. You’ll need to fund this investment and despite the success of franchising, it’s still an investment with risk.

The foundation of a franchise rests upon the franchise agreement and additional documents such as a personal guaranty, non-compete and an acknowledgment disclosure. Many of the provisions in today’s franchise agreements are crafted on prior litigation and numerous judicial decisions. Since franchisors conduct their franchise business over a broad geographic area, they require a strong agreement that favors them and can withstand various legal challenges and franchisee claims.

Because of these factors, it’s important for you to use a qualified franchise attorney before completing the transaction. The worst reason for not using a franchise attorney is to save money.

There is a great deal of franchise information on the Internet, including various websites such as the Federal Trade Commission (FTC) site. It’s fine to use this information to gain a basic understanding of franchising but don’t think your new-found knowledge can replace a franchise attorney.

Top 7 Reasons to Use a Franchise Attorney:

  1. Franchise law has become more complex and as result requires the expertise of a franchise attorney.
  2. A franchise attorney has experience dealing with various franchisors and can detect warning signs.
  3. A franchise attorney recognizes the particular provisions in franchise agreements that are unique.
  4. A franchise attorney knows which sections in the franchise agreement to focus on.
  5. It is easier for a franchise attorney to negotiate changes to your franchise agreement.
  6. Since franchisors are represented by franchise attorneys, you’ll need your attorney to speak the same language.
  7. The cost of a franchise attorney represents a small portion of your total investment in the franchise.

Before you sign the franchise agreement, pay the franchise fee and make the commitment to your new franchise, hire a franchise attorney to guide you. It’s an investment worth making.

About the Author: Ed Teixeira
Ed Teixeira is a recognized franchise expert with over 40 years’ experience in the franchise industry. He has served as a corporate executive for franchise firms in the retail, manufacturing, healthcare and technology industries and was a franchisee of a multi-million-dollar home healthcare franchise. Ed and Richard Chan are the authors of a new textbook, Franchising Strategies: The Entrepreneurs Guide to Success, to be published on July 1st by Routledge on July 1st. He has participated in the CEO Magazine Roundtable Meetings with business leaders from around the country and has spoken at a number of venues including the International Franchise Expo and Chinese Franchise Association in Shanghai, China. Over the course of his career, Ed has been involved with over 1,000 franchise locations and launched franchise concepts from existing business models. Ed can be contacted at [email protected].

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