Three Valuable Services A Franchise Attorney Can Provide
Selecting a franchise to buy into is only the start of your entrepreneurial journey. There are quite a few legal hurdles you must jump over before you're ready to run your store or restaurant. One person you should have on your team is a franchise attorney. Here are three services a franchise attorney can provide that may help you get through the obstacles to the finish line
Franchisor and Franchisee Search
When you sign up for a franchise business, you're also taking on the reputations of the franchisor and other franchisees, good or bad. The brand's interactions with the public can have a significant impact on your success. For instance, a company that's constantly mired in controversy may incite a customer boycott and make it difficult for you to turn a profit. Likewise, what other franchisees do at their businesses may come to haunt you, because the general public doesn't fully understand how franchises work (i.e. that stores are operated by unrelated individuals).
This is why it's important to have a franchise attorney perform a far-reaching search for information about the brand. This includes articles about the company, press releases, and legal skirmishes the company may be involved in; stuff the franchisor may not disclose. This can tell you a lot about the how the company handles itself, how the public views it, and what its real values and goals are. This, in turn, can help you decide whether you want to be associated with the brand or move on to someone else.
Franchise Disclosure Document Review
Another important service a franchise attorney can perform for you is review the franchise disclosure document. This is a legal document containing all the information the company is required by the Federal Trade Commission to disclose. This packet of information include a number of things, such as:
- Information about the franchisor and its history
- Bankruptcy filings and other litigation issues
- Fees charged
- Patents, copyrights, and trademarks
- Franchisor and franchisee obligations
- Financial statements
- Information about contract renewal, transfer, or termination
The average person doesn't have enough experience with legalese to adequately decipher all the materials, and it can take days or weeks to go through the info. Franchise attorneys have quite a bit of experience with these documents and can save you time by zeroing in on the most important things you need to know as well as explain terminology you may not understand.
For instance, the franchisor may have a list of activities that could cause the company to terminate your contract (e.g. a Dairy Queen owner had his store closed after making racist comments to customers). This is something the attorney would make sure you read and understood, because you may not have legal recourse to get your store back or sue the company for damages if you violate those rules.
Business Setup Advice
A third thing a franchise attorney can help you with is choosing the best legal entity for your business. There are several different business types (e.g. corporation, limited liability) that offer various levels of protection for you and your assets. A corporation provides the most protection, but it also requires the most effort to set up and maintain. On the other hand, a sole proprietorship is easy to establish, but you would be held personally responsible for the businesses debts if your company folded.
Choosing the right structure is critical to the long-term success of your venture, so it's important to thoroughly review the options with the lawyer. For more information about these and other services a franchise attorney can provide, contact a local lawyer, such as those at Mohajerian A Professional Law Corporation.