what kind of lawyer is needed for a franchise

What are the Four Kinds of Franchise Lawyers?

1. Lawyers that Handle Franchise and Non-Franchise Matters The first type of franchise lawyer is one who handles...
2. Lawyers that Represent Franchisees and Franchisors The majority of true franchise lawyers represent both franchisees...
3. Lawyers that Exclusively Represent Franchisors Some lawyers, mostly at large law...

Full Answer

Can a lawyer be a franchisee?

Aug 24, 2017 · What are the Four Kinds of Franchise Lawyers? 1. Lawyers that Handle Franchise and Non-Franchise Matters The first type of franchise lawyer is one who handles... 2. Lawyers that Represent Franchisees and Franchisors The majority of true franchise lawyers represent both franchisees... 3. Lawyers that ...

What should I look for in a franchise lawyer?

A “transactional attorney” will focus their practice on the preparation of your franchise legal documents. If your franchise lawyer does not have some focus on the transactional side, they will not be as efficient at preparing your documents. The advantages of working with a franchise attorney who also has a litigation practice are that they can represent you if needed and they …

What is the role of franchise law?

Mar 09, 2018 · You will need a lawyer and an accountant who are both familiar and experienced with reading franchise contracts, understanding franchise relationships (especially the relationship between franchisees and franchisors), and handling situations that might arise when their client is a franchisee. Should I Pay For a Franchise Lawyer Before Closing?

Can a lawyer negotiate a franchisee’s right to close?

Our role as legal counsel is to assist your determination of whether the franchise company you have selected is "right for you" by reviewing, discussing with you and clarifying the meaning, terms and implications of the Franchise Disclosure Document (FDD) required by the Federal Trade Commission to be given to all prospective franchisees at least 14 calendar days before any …

What documents are needed to open a franchise?

The documents to franchise your business include the franchise disclosure document (FDD), franchise agreement, operations manual, financial statements, and state specific registration applications.

Can anyone start a franchise?

Franchises can be bought by anyone with the means: Some cost very little to buy into, while others are beyond the range of anyone of moderate means.

What is the purpose of franchise law?

The franchise laws are a combination of federal and state laws that govern the registration, offer and sale of franchises, and the legal relationship between franchisors and franchisees.

What is a legal franchise?

A franchise is a legal and commercial relationship between the owner of a trademark, service mark, trade name, or advertising symbol (the franchisor) and someone who seeks to use that identification in a business (the franchisee).

How do franchise owners get paid?

A franchisor makes money from royalties and fees paid by the franchise owners. A franchise owner makes money through profits received from sales and service transactions. This is generally the left over amount of money received from revenue after overhead costs are taken out.Jul 22, 2021

How do you investigate a franchise?

Investigating a Franchise Opportunity: 6 Key StepsReach out for general information. Kick things off over the phone or through the company's online contact form if they offer one. ... The franchise disclosure document. ... Evaluate the franchisor. ... Talking to franchisees. ... Meet the franchisor at Discovery Day. ... Make a decision.

How long is a typical franchise agreement?

between five and 20 yearsThe typical length of a franchise agreement is between five and 20 years. A common reason for this general length of time is often the size of the franchisee's initial investment, though market conditions and the type of franchise can also be factors.Dec 10, 2021

What is the average initial franchise fee?

Most franchise companies require a new franchisee to pay a one time initial fee to become a franchisee. This fee can be as low as $10,000 to $15,000 or as high as the sky--in some cases well over $100,000. The average or typical initial franchise fee for a single unit is about $20,000 or $35,000.Aug 14, 2006

What do Franchise fees include?

The franchise fee covers the cost of your application, training, initial marketing and advertising, sales commission and general costs incurred by the franchisor's corporate team in getting you all set up.

Are franchises right or privilege?

“But we should all be reminded that under the law, the grant of a franchise is not a right, but a privilege.Jan 2, 2020

Who oversees the regulation of franchises?

Franchise Laws at the Federal Level Most of the federal obligations are contained in the Federal Franchise Rule at 16 C.F.R. §436 et seq. and related regulations promulgated by the Federal Trade Commission (the “FTC”).

Does a franchise have protection under the law?

Within a franchise agreement the franchisee is granted the legal right to establish a franchised outlet and operation wherein the franchisee, among other things, obtains the license and right to utilize the franchisors trademarks, trade dress, business systems, operations manual and sources of supply in offering and ...

What Franchise Lawyers Do?

Franchise lawyers advise and represent individuals and businesses on legal issues that involve franchising a business, preparing an FDD, filing and renewing FDD registrations, buying a franchise, and litigation involving the franchisor and franchisee relationship.

What Are the Franchise Laws?

The franchise laws are a combination of federal and state laws that regulate the offer and sale of franchises and the legal relationship between franchisors and franchisees.

Determine the Right Fee Structure for You?

The most common fee structure model within the legal industry is hourly-based billing. However, within the franchise industry, many franchise lawyers and franchise law firms offer fixed-fee project based billing.

What can a franchise lawyer do?

Franchise lawyers may also be able to help you negotiate the terms of your agreement and offer guidance on which aspects of the agreement are vague, requiring additional clarification from the franchisor.

Why do franchisors need to have a franchise attorney?

This is because franchisors don’t want to give one franchise owner more preferable terms than another, which could create dissent and resentment within the system. Regardless of whether a franchisor is willing to bend on its terms, having a franchise attorney review them is a MUST.

How to find a franchise attorney?

How Do I Find the Right Franchise Attorney? 1 IFA. The International Franchise Association (IFA) provides a list of their attorney partners on their website. While these firms are reliably franchise-oriented, some work exclusively for franchisors. Also, all pay for IFA membership. 2 SBA, Bar Association, Chamber of Commerce. Check with your local Small Business Association (SBA) office, Chamber of Commerce, and Bar Association for listings and recommendations of local franchise attorneys. 3 Current Franchisees. Ask some of the franchisees of the system you are considering who they used for legal counsel and what their experience was. 4 Franchise Attorneys. Don’t be afraid to “interview” franchise attorneys over the phone to get an idea of their philosophies, costs, experience, and personalities before making your decision.

What to do before meeting with franchise lawyer?

Prior to meeting with him or her you should review the documents on your own and prepare questions and concerns for your meeting. Don’t worry if some parts of the FDD don’t make sense to you. FDDs usually contain an extensive amount of “legalese” that your franchise lawyer will help to put into layman’s terms.

How do franchisors collect royalty payments?

Royalty payment structure: Some franchisors collect royalty payments through automatic withdrawals from a franchisee’s account , which can make tough financial months even more stressful. This payment schedule is sometimes negotiable.

What is an IFA partner?

The International Franchise Association (IFA) provides a list of their attorney partners on their website. While these firms are reliably franchise-oriented, some work exclusively for franchisors. Also, all pay for IFA membership. SBA, Bar Association, Chamber of Commerce. Check with your local Small Business Association (SBA) office, ...

Is franchise legal advice cheap?

While legal advice is never cheap, consulting with a franchise lawyer will be money well spent, as you are making an investment in your future personal and financial well being.

What is the importance of a franchise lawyer?

It is important that your franchise lawyer has significant experience on the franchisor side of the ball. If a franchise attorney does the majority of their work for franchisees, they may be too pro-franchisee with their advice.

What is a transactional attorney?

A “transactional attorney” will focus their practice on the preparation of your franchise legal documents. If your franchise lawyer does not have some focus on the transactional side, they will not be as efficient at preparing your documents.

Why do larger firms charge more?

Larger firms generally charge more as they have larger overheads to support and often pay their attorneys more. Generally speaking, we do not recommend that price is your top or sole criteria for attorney selection, as the small difference in price can often make a big difference in quality (and results!). Accessibility.

Do attorneys have franchise experience?

Unfortunately, the legal profession is highly competitive. And with hundreds of thousands of franchises that have been sold in the United States in the last decade, many attorneys who are not franchise specialists can claim to have franchise experience. But often, that experience may be limited to a review of a franchise disclosure document on ...

Do larger firms have more in the way of “connections” within the franchise community?

Larger firms may have more in the way of “connections” within the franchise community and will often have internal education programs that allows them to “cross-pollinate” when new ideas or issues arise. But larger firms may delegate some of the drafting work to associates (not partners).

Can a firm delegate drafting to associates?

But larger firms may delegate some of the drafting work to associates (not partners). While this allows them to work at a reduced fee (lower billing rates for associates), it may make them less familiar with your documents when questions arise.

Do transactional attorneys pay more than hourly?

The disadvantage is you might occasionally (rarely, in our experience) pay more than you would hourly. Most transactional attorneys are looking for a long term relationship, so they will often discount their fees to establish your relationship.

How important is it to have a franchise lawyer?

It is very important to have an franchise lawyer on your team who is familiar with your state’s franchising laws. From advertisements (Proposed ads must be pre-approved by the franchisor in states like California, Maryland, and Illinois) to the regulation of termination and non-renewals of agreements (Many states have laws including Minnesota, Maryland, Arkansas, California, Iowa, and Illinois), laws vary widely from state to state and it is in your best interest to have someone on your team that is familiar with your state’s rules, laws, and regulations.

What do I need to invest in a franchise?

You will need a lawyer and an accountant who are both familiar and experienced with reading franchise contracts, understanding franchise relationships (especially the relationship between franchisees and franchisors), and handling situations that might arise when their client is a franchisee.

1. Explanation and Review of the FDD

Our role as legal counsel is to assist your determination of whether the franchise company you have selected is "right for you" by reviewing, discussing with you and clarifying the meaning, terms and implications of the Franchise Disclosure Document (FDD) required by the Federal Trade Commission to be given to all prospective franchisees at least 14 calendar days before any documents are signed or payments made.

2. Amendment or Modification to Franchise Agreement

Many franchise systems, especially those that are new to franchising, may agree to make certain changes to their franchise agreement. When possible and necessary, we can help you negotiate these changes.

3. Creation of a Legal Business Entity

Generally, limited liability companies or subchapter s corporations are recommended as the legal entity to operate the franchise business. These and other options will be discussed, including preparation of buy-sell agreements (for corporations) or operating agreements (for LLC's).

4. Lease or Real Estate Purchase Agreements

Depending upon whether you are leasing space or purchasing a building/land for your franchise, lease or purchase agreements will be drafted and negotiated if requested.

What is the job of a franchise lawyer?

The attorney understands the content of the documents that you sign and they will actively advise you when making decisions. A lawyer's primary job is to protect your interests. They will inform you about the pros and cons of entering the franchise agreement. The professional advice and legal representation you get from them will increase your chances of success in your franchise business.

What is a franchise contract?

Contracts are legally binding documents that must be written and read with precision. A franchise attorney knows what to look for in an agreement. First, they are well educated on the latest franchise laws. Franchise laws vary from state to state, with some jurisdictions having more comprehensive rules than others.

Do You Need To Hire A Franchise Lawyer?

In this case, my answer is a resounding “ yes .” And please don’t think that my ‘yes’ is because this is a post that’s paid for by a franchise lawyer. Far from it. That’s not how I roll.

3 Reasons Why You Need To Hire A Franchise Lawyer

What follows are 3 reasons why it’s crucial for you to hire a franchise attorney .

Who Gave You That Advice?

Hold on! Who “ told ” you that? I want a name and a phone number. Kidding.

What is franchise attorney?

Franchise attorneys work in private practice law firms, as in-house counsel for franchisers and as government employees who enforce federal and state regulations. Large franchises are likely to have their own in-house counsel who work exclusively on franchise issues.

Why do franchise lawyers work?

Because franchise lawyers have a wide skill set including contract law, dispute resolution and litigation, franchise law provides an opportunity for a lawyer to become well-rounded in many areas of legal practice. Attorneys often work with industries that are known nationwide.

What is the purpose of federal franchise law?

The purpose of the law is to require franchisers to give franchisees the information that they need in order to determine if the franchise is a sound business investment. Franchisers must give prospective franchisees information on a variety ...

What is franchise law?

Franchise law encompasses laws and regulations at all levels of government that govern how corporations and individuals may enter into franchise relationships. The practice of franchise law involves helping clients understand and comply with franchise laws. It may also include enforcing franchise laws or advocating for changes to the law.

What are the characteristics of a franchise?

There are three hallmark characteristics of a franchise: 1. The franchisee may use the franchise’s trademarks, name, logos and products. 2. The franchisee pays the franchiser. Often, the franchisee pays a percentage of their gross income to the franchise as royalties. 3. The franchiser has significant control over the way ...

What is common law for franchises?

Common law that addresses contracts, fraud, employment and other business-related issues still apply to franchise businesses. Franchise attorneys must navigate the myriad of laws, regulations and common laws that exist at all levels. Attorneys that work on behalf of the franchise may need to know the laws of many states in order to conduct business.

What information do franchisees need?

Franchisers must give prospective franchisees information on a variety of topics including the following: The owner of the franchise, their parent company and affiliates. Bankruptcy information. Estimate of startup costs. Restrictions on the business. Obligations of the independent business owner.

How to contact franchising company?

To learn more about franchising your business, the documents involved and how we can help. Contact us at (718) 979-8688, live chat, or by email. Learn more about our fixed fee Franchise Launch Program that combines legal representation + franchise development know-how to help you franchise the right way.

What is a franchise disclosure document?

Before you can offer or sell a franchise you are required to issue and disclose a franchise disclosure document (FDD) to the individuals that you are offering your franchise to and who may eventually sign a franchise agreement and become your franchisee. The FDD is a legal document that includes 23 disclosure items ...