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Franchisors sometimes assume that they don’t need a franchise attorney by their side. Others think that any business lawyer is able to assist them as they pursue this complex method of starting or expanding a business. However, both of these choices are a mistake, given how complex franchising agreements are. Here are four reasons why franchisors and franchisees should work with a franchise attorney.
Franchise Attorneys Understand Franchise Law
While there are more than a million attorneys in the United States, few specialize in franchising law. Complicating matters is the complex network of FTC regulations and state laws that govern franchises, along with rules unique to a number of industries. The average business attorney isn’t qualified to help you navigate this complex legal landscape. Any mistake can create headaches down the line, and disputes often land in court. Furthermore, a business attorney who drafts a basic franchise agreement that is valid in one state may leave you in a lurch if you try to expand to a new state or internationally.
Franchising Attorneys Are Experts in Franchising Documents
The Franchise Disclosure Document or FDD and franchise agreement are the bedrock of the business relationship. As a franchisor, you want carefully crafted paperwork that protects against future legal claims and covers every aspect of the business you want to fall within specific guidelines. As a franchisee, you must understand the FDD and franchise agreement inside and out in order to make an informed decision about the business model you’re expected to follow. Franchisor attorneys will be able to guide you through the steps to franchise, helping you set up a solid franchising system or strong business contract that will cover everything that needs to be addressed.
If the franchise agreement needs to be amended, a franchise attorney can guide you through the process of franchise document amendments, as well as the annual renewals you should be going through.
Franchise Attorneys Are Excellent Resources When You’re Getting Started
Franchise attorneys can guide you through the process of registering the franchise if it is in a state that requires registration. They may be able to help you secure financing. They’ll give you advice on how to set up your new business while limiting your liability. If you’re a business owner seeking to set up franchises, a franchise attorney can help you set up the new franchising company, limiting the liability of the original chain and your personal liability. They’ll also craft contracts that protect your intellectual property and business secrets so that a rogue franchisee can’t threaten your original business.
Franchise Attorneys Can Help You When Problems Arise
People often enter franchise agreements and then run into problems. A franchisee should consult with a franchise attorney to understand their options instead of assuming they have to go to court. There may be dispute resolution mechanisms built into the contract, or they may be making mistakes in how they run the business. If the franchisor is not honoring their commitments, a franchise attorney is the best person to have by your side when confronting the franchisor. They’re also the only option you have if the dispute does go to court. If the problems are occurring with your suppliers, a franchising attorney can assist you, as well.
Franchises offer existing businesses a way to profit off their successful business model, while franchisees can copy a viable business model to quickly start their own business. However, you cannot afford to not have expert legal guidance every step of the way.