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Use a Franchise Attorney When Investing In a Franchise!

Written by: Joel Libava

Article Overview: Why would you use an attorney that is a family member, or family friend....

Use a Franchise Attorney When Investing In a Franchise!

When it comes to all the legal intricacies of a franchise agreement, using relatives that are attorneys such as your Uncle Bob, or your Aunt Peggy may be a pitiful choice.
{ Legal disclaimer: Uncle Bob and Aunt Peggy are pseudonyms for any relative or close family friend that may also be attorneys. To all the Uncle Bob's and Aunt Peggy's...sorry.}

What I am trying to say is that when it comes to huge decisions such as investing in a business of your own, it may make sense to use specialists familiar with business ownership questions.

When you purchased your first house, did you look in the phone book for a Realtor? Or did you start asking around for names of the right people for your situation? Did you work with just any Realtor? Or did you work with one who was familiar with the area in which you were looking?

If you are going to write a check to a franchise company for $30k, start by doing things right throughout the entire process. I just did a seminar on franchising, and a nice lady came up to me beforehand, to ask a question. {Keyword here is beforehand}

Question: "Hi...I know it is probably too late, but my husband and I just purchased a franchise last week, and we think we made a mistake." I think we should have talked to you before we bought this franchise."

My response:" WOW! What type of franchise is it?"

Answer: "It is an advertising related franchise, where we would go out and sell advertising."

My response: "OK. So what is the problem you are experiencing?"

Answer: " The selling part of it is not what we expected."

My response: "Meaning?.."

Answer: "Folks don't seem to like advertising salespeople. This is not right for us.Can we get our money back?"

I hope this lady can recoup some of their investment. My suggestion to them was to go out and hire a salesperson right away! This nice lady sounded like she was prepared to write off her losses.... I hope that she and her husband re-think this, and find a way to make it work. They will not be getting a refund from the franchise company.


When it comes to small business/franchise ownership, I am constantly amazed by the people who invest in a franchise, without even talking to the current franchise owners of the franchise they just purchased!
If one knows the questions to ask, one can easily get the answers.

The point here is that if you are willing to invest your money into a business of your own, but you let the excitement of finally not having to work for anyone anymore get the best of you, mistakes will be made.

If you are thinking seriously of investing in a franchise of your own, and you are pretty far down the path, make an appointment with an attorney familiar with franchise agreements. The franchise contract itself is usually 20+ pages long, and filled with head scratching legalese. An attorney who is familiar with franchising can save you time, money, and future headaches. I am a franchise expert, and can barely understand the contracts that I see on a daily basis.

Do this part right, folks.

Related Articles
  Hiring a Franchise Lawyer
  10 Tips for Selecting the Best Franchise
  10 Tips for selecting the Best Franchise
  Franchise information that is pertinent to your investigation is disclosed in the Uniform Franchise Offering Circular (UFOC).
  How to Negotiate Your Franchise Agreement

Article Tags: attorneys, business ownership, decisions, family friend, first house, franchise agreement, franchise company, legal disclaimer, legal intricacies, losses, mistake, money, ownership questions, phone book, realtor, relatives, salespeople, salesperson, suggestion, uncle bob



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Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.
Re: Info for would be franchisers... - [quote="Sebastien":2gam0klq][quote="BuzzAroundBooks":2gam0klq]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to.[/quote:2gam0klq][/quote:2gam0klq] That is really what I look for in any industry publication. We lead busy lives and when people fill their magazines with fluff, not only does it benefit no one, but it makes us truly appreciate those that don't. Thanks!


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