Buying A Franchise? 4 Reasons You Need A Lawyer
Buying into a franchise is one of the best ways to make huge profits in business. However, franchising may quickly become a regrettable decision without proper planning and preparation. That’s why you’ll find it best to take measures to protect yourself from any undesirable consequences.
Franchise agreements are challenging to navigate for someone new to the franchising business. Business persons who have been franchisors also need assistance working through franchise contracts.
One of the best things you can do to ensure your franchise deal moves smoothly is seek legal assistance. This article looks at four reasons why it is best to hire a lawyer when buying a franchise.
1. A Franchise Lawyer Helps You Assess the Franchisor
When buying a franchise, you will encounter a franchise disclosure document (FDD). The FDD contains pertinent information about the franchisor. Some information included in the FDD includes:
• The franchisor’s litigation history
• The franchisor’s financial statements
• Franchise owners’ obligations
• Supplier restrictions
• Trademark and copyright rules, etc.
You must read a franchise agreement before you sign it. However, the FDD is a hefty document, and you may have difficulty evaluating it on your own. An attorney works with a team that can review the hefty document and gives you a breakdown of the franchisor’s information.
With this information, you can decide whether or not to continue with the transaction.
2. A Franchise Lawyer Helps You Understand the Franchise Agreement
A franchise lawyer has appraised multiple franchise agreements. Therefore, they know to look into the fine print.
The person selling you the franchise will have their legal team prepare an agreement that protects them. Thus you need to ensure the terms of the contract are favorable to you. When an attorney looks over your franchise agreement, you can trust them not to miss important details.
Your attorney looks into contract clauses discussing your roles and obligations. They also consider the terms addressing the timelines for contract termination and consequences for terminating the contract before the agreed time.
Thus, with a franchise lawyer by your side, you are sure of the terms you sign in the franchise agreement.
3. An Attorney Advises You on What Works and What Doesn’t
An experienced franchise attorney knows the pros and cons of different franchise set-ups. Thus they advise you on the best way to set up your franchise.
If you are unsure whether investing in a franchise is the best choice for you, your attorney helps you evaluate the risks of the franchise to make an informed decision. They also help you choose the right legal entity for your franchise.
Because your attorney represents you, they look after your best interests. Thus, they give you more information than the party selling the franchise will. If your attorney has dealt with the franchisor, they may even give you insider information.
4. A Franchise Attorney Saves You Money
Not hiring an attorney when making a franchise deal may save you money in the short term. However, it leaves you vulnerable to future losses. Remember, a successful transaction does not eliminate the chance of future disputes.
Ideally, you could anticipate all potential disputes and include resolution measures in the franchise agreement before signing it. Otherwise, you will spend a lot of time and litigation fees resolving disputes in the future.
As a novice franchise owner, you’d be hard-pressed to spot all the clauses in a franchise agreement that may cause future problems. A franchise lawyer has extensive knowledge of franchise contracts. They leverage their knowledge to devise solutions to problem areas before they become costly disputes, thus saving you money in the long run.
You need an experienced franchise attorney if you want a good outcome in your franchise deal, and the franchise attorneys at Mohajerian are the best. Contact us today for legal assistance on your franchise deal in California.