4 Benefits of Having a Franchise Lawyer in Your Corner: A Guide for Startup Franchisees

7 February 2018
 Categories: Law, Blog


Franchising can be quite lucrative, mainly if prospective business owners try to invest their time and money in an international or national franchise that has a competitive edge in a given niche market. Franchising requires you to prepare your legal paperwork to protect your future business. For example, most franchise disclosure agreements and documents provided by a franchisor are very bulky and contain legal jargon that only qualified franchise lawyers can interpret and advise you accordingly. Here are some benefits of having a franchise lawyer in your corner. 

Business Arrangement -- Before you enter into a franchise, you must go through all the legal processes of forming a business entity first. The business arrangement can be a sole proprietorship, a corporation, a limited liability company, or a partnership. The legal counsel will work with you to choose an appropriate business entity that not only helps you get the right share of profits but also protects your business against liability claims by third parties and the franchisor.

Background Check of Franchisor -- Every company has a track record, whether bad or good. Your preferred counsel can use his vast network of lawyers and investigators to conduct a background check before you enter into any agreement. For instance, the legal counsel can check if the franchisor has been forthright with information regarding royalty payouts to other companies. Also, litigation history is crucial before signing off on a franchise. Bankruptcy applications and lawsuits associated with a franchisor or its affiliates are a definite red flag to look out for.

Understand the Fine Print -- Any person who has ever seen a franchise document will tell you that it is very voluminous. Reading through all the pages can be daunting notwithstanding the legal language that can be quite confusing to a layperson. You don't want to sign between the dotted lines if you have no clue what the document is all about. This is where a franchise lawyer comes in. The lawyer does all the legal legwork for you. The franchise lawyer will review terminologies used in the franchise agreement and notify you of any red flags or missing information.    

Dispute Resolution -- The link between a franchisor and franchisee is not only a business arrangement but also a continuous relationship into the future. However, just like any relationship, problems do arise; for instance, allegations of falsification of earnings, royalty payouts and lack of technical support from the franchisor. In some cases, the relationship can no longer be tenable thereby forcing both parties to consider termination of the agreement. A franchise lawyer can help in dispute resolution, which is a cost-efficient option compared to litigation.