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4 Reasons Why Hiring a Franchise Attorney is Important

If you have found a franchise that you feel you have a reasonable chance of owning, you should protect yourself legally before entering into the deal.  The only way to do this is to hire a franchise attorney.

According to Joel Libava, a franchise ownership adviser and author, here are four reasons why:

 

1. Franchise Attorneys know what matters

By law, franchisors are required to provide franchise owners the Franchise Disclosure Document (FDD) before they actually buy the franchise.

This document includes everything that the Federal Trade Commission (FTC) has deemed necessary that the franchisor must provide to the franchisee.  It’s very important to understand everything in the FDD, as there will be obligations and restrictions you’ll have as a franchisee.  If you don’t abide by them, you could be terminated.

Attorneys who specialize in franchising know exactly what to focus on in the FDD and the franchise contract.  They also keep current with the constantly changing franchise laws.

2. Franchise Attorneys can advise you on choosing the right business entity

There are various types of business entities – sole proprietorship, partnership, LLC, C Corporation, S Corporation, etc.

It is crucial to choose the right business entity for your franchise.  Your legal rights and liabilities as a business owner, as well as how your business is taxed is determined by your business entity.

A competent attorney specializing in franchising will be able to offer valuable suggestions on which type of business entity will work for you.

3. Franchise Attorneys can help you if things go wrong

No one expects to fail when they go into business, especially if it is a franchise.  But unforeseen circumstances, such as you weren’t a good fit for the franchise, you didn’t make enough money fast enough, your location was not a good one, etc., can force you to close your business down.

Franchise attorneys are trained to go through the legal aspects of buying a franchise and can help you understand the specifics if you need close down your business.

4. Franchise Attorneys can provide legal representation

If a member of the franchise development team tells you that you would be wasting your money by hiring an attorney, since nothing is negotiable in the franchise agreement, you should ignore this comment.  Franchise business developers are salespeople and want franchise agreements signed.

A franchise agreement is a wordy document and difficult to understand without proper legal representation.  Some of it, in fact, may be negotiable.

Do yourself a favor…hire a competent franchise attorney.  It will help you sleep better at night!

Click here to read the full Entrepreneur article about Joel Libava’s advice on hiring a franchise attorney.

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