How Can Franchising Legal Teams Help Entrepreneurs?

The Franchise Disclosure Document, or FDD, is required by the Federal Trade Commission from franchisors and explains to qualified potential franchisees important information about such things as: * The franchisor's management teamrn* Estimated startup costsrn* Royalties and ongoing fees franchisees are required to pay Understanding this document thoroughly before signing any franchise contract is absolutely critical to your success, and franchising legal teams are there to make sure you understand every aspect of your FDD. By Knowing What Questions You Should Ask By working with a franchise law firm, you'll find out exactly what questions you need answers to before committing yourself as a franchisee. For example, you need to know what your up-front costs will be, how much you'll be required to pay for leasing property or equipment, and how much you'll pay to the franchisor in royalties. You will need to find out exactly how the franchisor makes money because different franchisors structure their services differently. You will also need to know whether you'll be required to buy certain goods and services from the franchisor or from particular vendors. By Advising You on Termination and Non-Renewal Issues When a franchisor terminates your contract, he or she has to have a good reason for doing so. Otherwise, you may be able to seek help from the legal system to keep your franchise. Some franchisors effectively "terminate" franchises when the term of the initial contract is up. In some cases you can fight non-renewal of your franchise contract, but you need the help of an experienced franchise law firm to know what your options are. Franchisors have been known to use non-renewal to take over franchises that are successful in an attempt to build up their own franchise empire. By Helping You Know What to Look Out For An experienced franchise attorney knows some of the "red flags" you should look for when you are considering buying a franchise. For example, when a franchisor tells you that if you don't act within a certain time frame you'll lose your opportunity, it can mean he or she is just trying to get you to sign on without the necessary due diligence beforehand. If existing franchise owners are unable to demonstrate financial success, there could be problems with the franchise. Your franchise lawyer helps you know what to watch out for so that you don't make an expensive mistake. By Helping You Formulate an Exit Strategy It may seem counterintuitive to have an exit strategy when you haven't even signed off on a franchise contract, but it is actually very wise. You need to know what would happen if you should choose to sell your business, and how to run your business so that if you do decide to sell, other potential owners will see your franchise as a good opportunity. When starting a franchise, at minimum you're looking at a three to five year commitment. When it's time to renew your franchise contract, you want to be in a good position to continue as a franchise owner or to sell if you want to move on.