Buying a franchise is something you must seriously consider before following through with paying a franchise fee and signing a franchise agreement. Continue reading to learn what factors you should consider before buying a franchise and how one of the experienced franchise acquisition attorneys at FortmanSpann, LLC can walk you through this decision-making process.
What are important factors to consider before buying a franchise?
Above all else, you must dedicate your time to researching the franchisor and franchise system you may buy into, and whether or not this opportunity fits your business goals and personal goals. This is because it would be a mistake to assume that your franchise’s profitability is guaranteed.
One way you can do your research is by carefully evaluating your franchisor’s Franchise Disclosure Document (FDD). This document consists of legal disclosures, mandated by federal law, that relates to a franchise’s business and legal issues. When evaluating the FDD, you must ask yourself whether these legal rights match your expectations. Importantly, these disclosures supersede any verbal promise that a franchisor may have given to you.
And lastly, it may be helpful to listen to the experiences of those who have already purchased, established, and operated the franchise you are interested in. These existing franchisees may be able to tell you more about franchisor support and advertising initiatives, the franchise’s start-up costs and profitability, and otherwise personal recounts that cannot be found in the FDD. Importantly, you may find the existing franchisee’s contact information in Item 20 of the FDD.
How can a franchise law attorney help me in my decision?
An important factor to note is that your franchise agreement is indeed negotiable. And with negotiation comes the need for a seasoned franchise law attorney. Just some of the terms that our team can help you negotiate include the following:
- The grace period for the accrual of your royalty obligations.
- The cure period you will be given for alleged defaults.
- The scope of your protected territory.
- Your right to expand into new territories.
- Your right to transfer your franchise, whether it be via estate planning or otherwise.
- Your right to renew your franchise agreement.
- Your liability if you have to terminate your franchise agreement.
In the end, you are about to make an expensive and long-term commitment upon paying a franchise fee and signing a franchise agreement. So, you must not proceed any further without conducting a comprehensive evaluation with the help of one of the skilled franchise law attorneys. Our team will help detect any red flags, inconsistencies with the franchisor’s verbal promises vs. the written agreement, and profitability concerns. Retain our services today.