You may think that you do not have to consult with anyone before investing in a franchise if you are solely using your hard-earned money to do so. But it is almost always a beneficial idea to get a second, or third, opinion before making this significant financial decision. Continue reading to learn who you should consult before buying a franchise and how one of the experienced franchise acquisition attorneys at FortmanSpann, LLC can be the one to offer some guidance.
What party should I consult before buying into a franchise?
Though you may not initially think to do so, it may be in your best interest to consult existing franchisees before buying into a franchise. This is because likely no other party will have a better idea of what you are about to get yourself into than the existing franchisees themselves. And once they agree to have a discussion, you should ask questions similar to the following:
- What financial success have you had with the products and services that the franchise offers?
- What do the franchise fees and royalties look like for the products and services that the franchise offers?
- What did the training look like when you initially bought the franchise?
- What does the continued support from the franchisor look like?
Importantly, you may retrieve the contact information of existing franchisees in Item 20 of your franchise disclosure document (FDD). It may be best to contact individuals that go beyond the franchisor’s recommended “star franchisees.” And if a franchisor has failed to disclose these contacts in the FDD, then you must reach out to a seasoned franchise attorney.
Why should I speak with a franchise attorney?
Once you get business advice from an existing franchisee, you may get legal advice from a competent franchise attorney. This is because an attorney may brief you on the ethicality of the agreement that you are going to get yourself into. They then may advise you on what negotiations may be worth making. Examples of questions that your attorney may be able to answer for you are as follows:
- What is the fairness of the protected territory that I may be granted?
- What is the fairness of the buildout and lease obligations that I may be required to take on?
- What is the fairness of the advertising fund fees that I may be required to contribute to?
- What is the fairness of continuing royalty that I may be required to pay on a monthly or weekly basis?
You must make a valiant effort toward getting in contact with the appropriate parties before making this colossal financial decision. Reach out to one of the skilled franchise law attorneys at FortmanSpann, LLC to get started on these discussions.