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 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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. Franchisee lawyers can educate you.  This is certainly the philosophy of the attorneys at Spadea Lignana LLC. 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.
  6. 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.
  7. 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.
  8. 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.
  9. There is no question that having years of experience in the franchise world allows the attorneys at Spadea Lignana LLC to know what and how to negotiate the best terms for our clients.
  10. 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 article continues to state that the ideal franchise attorneys for assisting prospective franchisees are those who are members of the American Bar Association’s Forum on Franchising (the franchise law section of the ABA), which only consists of approximately 2000 attorneys nationwide.