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Legal Advice For Buying a Franchise Resale

Due to the complex nature of franchising, you should always seek assistance from a franchise attorney when looking to buy a franchise resale.

Franchisees can wrongly think that because they are buying an existing business then they do not need to use an attorney as the current franchisee did and all was ok. It may be the case that they did use one, but has anything changed since then? And alternatively they may not have used an attorney at all.

Though most agreements favor the franchisor you still need to know what is in them and what you are signing. It is therefore vital that you use the services of an attorney who specializes in franchising. No matter how good they are, it is pointless using an attorney who doesn't know about franchising as they will not be able to identify areas of concern etc as they have no experience in this field.

It is essential that you understand all aspects of the documents you sign as without knowing it will only result in conflict or misunderstandings in the future. By an attorney explaining the document to you, you will become comfortable in what you are signing and will know your obligations as well as those of the franchisor.

A large number of the franchisees who fail, do so because they didn't us a franchise attorney. The most cited reasons for this are:

  • Too expensive — even though someone may put their life savings into buying a business, it is hard to comprehend that they will cut corners when it comes to seeking legal advice, but they do! They feel that they have spent enough money and if there is a way to save money then they will do it, which usually means dumping the attorney! This is one area however where you cannot afford to cut corners.
  • Large franchise network — because a franchise has lots of franchisees, it doesn't necessarily mean that they have all used an attorney and the agreements are all ok and you don't have to. If not an ethical franchise they may all have been discouraged from seeking legal advice.
  • Looks straightforward — unless you are a franchise attorney yourself, then you reading a document and saying it is all straightforward, does not count as proper legal advice!
  • Unable to change the agreement — some franchisees decide that it is pointless using an attorney as they are unable to change the agreement anyway. The point of the attorney is to make you comfortable in what you signing, which means understanding all aspects of the agreement. You will know what you are getting into before signing, and not afterwards when it is too late!
  • Franchisor's word — if a franchisor tells you that the business is so wonderful that you do not need an attorney, then run for the hills! You should ALWAYS use an attorney, and an ethical franchisor will always encourage this.
  • Not enough time — a franchisor should allow you sufficient time to look at the business and should never rush you into signing anything. If you are asked to sign off or else they will give the territory to someone else, then walk away. Never feel pressurized into signing anything. This is a big decision you are making and you should be allowed to make it in your own time.

Buying a franchise is a big investment and so to make sure that you are not throwing your money down the drain, you need to use a franchise attorney. They might be expensive but will save you a lot of money in the long run.

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