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It is critical when evaluating a franchise opportunity to retain experienced counsel. Here is a list of 10 reasons why that is important for prospective franchisees.
A recent article in Franchise Help by Jim Meaney (http://www.franchisehelp.com/blog/franchise-buyers-don%E2%80%99t-need-a-lawyer-%E2%80%93-yeah-right) addressed this question. It is an excellent question which I hear frequently. He replied with a list of 10 items that he believes are reasons for hiring experienced franchise counsel to evaluate franchise documents. Here are my take on Jim's 10 items:
Let's examine some of the items on Jim's list:
- Franchising is complicated - the documents in franchising are regulated by the FTC and certain states. They are lengthy, and although the FDD is supposed to be written in "Plain English", not easily understood by the non-franchise lawyer.
- Without experience you don't know what to look for - attorneys, such as those in my firm evaluate franchise documents all day long. They know what is typical and what is not, what can be negotiated, what can't and what type of advice to provide to the client to best assist the client in making this important decision.
- Financial considerations in hiring an experienced franchise attorney. Our fees are a flat fee and therefore predictable and reasonable given the extensive review we perform. Prospective franchisees should base their decision on counsel based on the fullness of the services they will receive and whether the fee is a flat fee or hourly. A flat fee allows the prospective franchisee to know in advance what the total cost of evaluating a franchise opportunity will be.
- Although this is a broad generalization, in this specialized area of the law, this statement is quite likely true. Experienced franchisee counsel knows what is typical, what is negotiable and how best to assist the prospective franchisee.
- Franchisee lawyers can educate you. This is certainly the philosophy of the attorneys at the Law Offices of Nancy L. Lanard, P.C. We believe it is an important function of our job to our prospective franchisees to educate them on their obligations to the franchisor and the expectations they should have of the franchisor. In addition, we can educate them on resources for finding appropriate franchises through the IFA and/or franchise brokers.
- We always start by investigating the franchise system, asking many questions of the prospective franchisee/client, evaluating the appropriate sections of the FDD, checking that the trademark is a federally registered trademark, etc, in addition to reviewing the franchise agreement.
- With years of experience assisting prospective franchisees in evaluating the franchise documents, we know that there are certain red flags that arise indicate that a client should steer clear of a franchise.
- Experienced and knowledgeable franchise attorneys have many resources and connections for financing as well as for finding a good franchise. In addition, a firm such as ours, has decades of experience with not only franchising document review, but also entity formation and the review of the lease for the business.
- There is no question that having years of experience in the franchise world allows the attorneys at the Law Offices of Nancy L. Lanard, P.C. to know what and how to negotiate the best terms for our clients.
- The cost of experienced franchise counsel should be a flat fee that encompasses a full review and negotiation of the franchise agreement, including telephone review with the client so that the client completely understands the issues and concerns.
The federal Patient Protection and Affordable Care Act, signed into law March 23, 2010, includes a provision that creates a national, uniform nutrition-disclosure standard for restaurants. This articles discusses the impact on franchises in the restaurant industry.
Along with the federal Patient Protection and Affordable Care Act came a new federal law requiring that any restaurant chain with greater than 20 units must display calories for each of their standard menu items. This new law becomes mandatory in 2012. The law will preempt local, county and state ordinances that are in place in California, New York City and Philadelphia, among others. The question becomes, how will this effect franchisors and franchisees in the restaurant industry?
Franchisors will need to ensure that all of their franchisees are in compliance with the new law. The federal law simplifies standards across the country, thereby making it easier for franchisors to ensure compliance with the laws. Prior to the federal law, a franchisor may have to be concerned with understanding the laws of various municipalities, such as New York City and Philadelphia, which may vary greatly in their requirements. Since the new federal law preempts any local and state regulations, compliance is easier to govern. Read more »
What are the requirements that a franchisee must meet to renew his or her franchise? The list of criteria should be clearly identified in the franchise agreement and evaluated.
What are appropriate requirements on the renewal of a franchise? When forming a franchise, a company must decide the requirements that a franchisee must meet in order to renew the franchise. Will the franchisee be required to pay an additional franchise fee? Will this fee be a percentage of the currently charged franchise fee or a percentage of the fee he or she originally paid? Here are some typical requirements that a a franchisor may have of its franchisee on renewal: Read more »