Franchise Buyers Don’t Need a Lawyer – Yeah Right!
Okay, so I am biased. But it is a well-developed bias based on years of experience and shattered dreams. And years of hearing the same refrains: “I couldn’t afford a lawyer when I bought my franchise,” “I used the lawyer who drafted my will and he said the contract was fine,” and “I heard I would be wasting my money because the franchisor would not change the contract anyway.”
These excuses are usually first heard when I meet with a franchise owner who is now asking for advice regarding their dissatisfaction with their franchise relationship. Too late. That is, sometimes it is too late to help them.
The best time to seek the help of knowledgeable franchise counsel is when you are buying a franchise.
Here are the top 10 reasons why:
- Franchising is complicated.
- Unless you have a lot of experience buying franchises, you don’t know what to look for.
- If you cannot afford a qualified franchise attorney, you cannot afford the franchise.
- Lawyers who do not practice franchise law cannot effectively help you.
- Qualified franchise lawyers can educate you on the best way to search for a franchise and how to use their services.
- Qualified franchise lawyers start with an investigation of the franchise system and the Franchise Disclosure Document, not the franchise agreement.
- Good counsel can help you avoid selecting the wrong franchise.
- Knowledgeable franchise lawyers have resources and connections that you likely don’t.
- Proper negotiation of a development or franchise agreement is a matter of timing and nuance.
- The cost of a good franchise lawyer may not be more than 2-3% of your overall investment.
There are many other reasons, but you get the picture. Lawyers who practice regularly in the franchise arena (many of whom are members of the American Bar Association Forum on Franchising) can “read between the lines” of a Franchise Disclosure Document, know what is missing, and are able to detect a bad deal or even a scam.
The most effective use of a franchise lawyer may be taking pass on that franchise deal that could have resulted in the loss of your home, retirement fund and savings account, not to mention that loan from your mother.
Choose wisely but choose an experienced franchise lawyer first!
Jim Meaney is a lawyer with Zaino & Humphrey, LPA in Columbus, Ohio who has represented franchisors and franchisees for nearly 30 years. He is also the author of How to Buy a Franchise. Visit www.ohiofranchiselawyer.com for more information or contact Jim directly at 614.975.9876 or jmeaney@zandhlpa.com.
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Possessing an entrepreneurial mindset is a plus but one should also have the employee mindset as well. This lies in the fact that even though the franchisee must have the steely determination and drive to launch a business, they must be willing to be restrained and follow the directions of the franchisor. The level of control for a franchisee is noticeably less than of that of being an owner of your own independent business. However the level of risk presented to a franchisee is less than that of an independent business owner. Therefore this type of business is preferable for those looking for less risk. If we were to prepare a checklist of the traits, which were to be present within the ideal franchisee, it would appear something as:
