Franchises offer a very particular kind of business opportunity in today's competitive business environment: careful choice of a franchise can allow a franchisee to start a new business with confidence that they have the support required to get a fledgling business up and running successfully. A good franchise will provide the franchisor with all of the business policy, bookkeeping, and ordering advice necessary to start up a business with a minimum of confusion and delay at the outset, while simultaneously providing pre-existing goodwill and recognition that can translate into a customer base from opening day.
For business operators who have a business model that lends itself to duplication, franchising out of that experience and knowledge can rapidly multiply the value of that original business, converting a stable and steady-earning business into a massively successful enterprise.
We have advised both franchisors and franchisees on the structuring and negotiation of franchise agreements and related ancillary documentation.
For Potential Franchisors:
We provide a full array of legal advice relating to structuring, documentation, and granting of franchise rights. In particular we can advise on issues relating to intellectual property rights and protection(especially trademarks and copyrights), one of the fundamental issues for any successful franchise. We can also assist with determining franchise rates and fee structures in order to maximize profitability. We believe that ensuring the success of your franchisees is the optimal route franchisor profits, and we can assist you to assist them, so that everyone benefits.
For Potential Franchisees:
Please note that the first piece of advice that we give to any potential franchisee is to seek legal advice before you enter into a franchise agreement of any kind. Such documents are typically lengthy and complex, and once signed, they constitute a legally binding agreement which replaces anything and everything that the franchisor told you verbally. So promises made in person can be completely undone in the contract.
Further, be prepared to pay to have the agreement properly reviewed. Franchisors will often tell potential franchisees either that they need not have a lawyer review the agreement at all, or that if they do get it reviewed, it should only cost a couple of hundred dollars.
If you consider the the length and complexity of your franchise agreement (taking into account not only the time necessary for your lawyer to read it, but also the time to discuss it with you and/or to put in writing the results of that review), you should not be surprised if such a review costs at least $1,500.00. Depending on the length and complexity of the agreement(s), twice that amount can be reasonable. However, your lawyer should, upon a brief initial review of the document, be prepared to provide you with a fee quote for the review, so that you can at least budget for this advice.
Given that the potential franchisee is typically seeking a long-term business, we advise that this cost be considered an investment in the franchise itself: a full understanding of what the agreement provides and, maybe more importantly, does not provide, could save significant costs and heartache later. Further, a thorough review of the agreement will provide the potential franchisee with an understanding of their responsibilities under the agreement. Issues such as insurance requirements, requirements to participate in (and, more importantly, to fund) advertising campaigns, and other obligations can come as significant and costly surprises.
