You have finally found the business you believe has a reasonable chance of being successful. Instead of starting with a blank page, you select a franchise from about a dozen possibilities. Now, you are working on a business plan to help solidify your success. These are good initial steps, but there is still one more thing to do before signing the contract and opening the doors.
Hiring a franchise business attorney will help with the legal aspects of ownership. Legally protecting yourself keeps the things you aim to do in the right perspective. Here are four reasons why this is important.
Guidance on the Important Details
Before buying a franchise, the law requires that all prospective owners receive a copy of the Franchise Disclosure Document. This document covers everything that you will need to know about the franchisor that has your interest.
Being intimately aware of what this document details makes good business sense. However, there might be language that is not easily deciphered. Certain restrictions and obligations are critical to understand. Otherwise, your contract could be terminated. An attorney who specializes in franchise business law can interpret the specifics and ensure that you are signing a mutually beneficial contract.
Advice on Choosing a Business Entity
Hiring a competent attorney gives you access to useful suggestions on setting up your business properly. You may have questions about making the business a C-Corporation versus a Limited Liability Corporation. Perhaps for legal and tax purposes, the business will do better as a Subchapter S Corporation.
Knowing what makes one business entity different from the other is crucial during the beginning stages. Changes once you are operating might not be easy to complete. Ultimately, the type of entity you establish determines your liabilities and legal rights as the named owner of the business.
Franchise Representative Says You Don’t Need an Attorney
In some cases, a representative with the franchise might tell you that hiring your own attorney is not necessary. Advice that it would be a waste of money is the perfect reason to hire your own legal representative. Yes, the franchise may offer help with marketing, location selection and other details, you need someone who will speak on your behalf.
Nothing you sign in the franchise agreement is negotiable. Typically, you work with a development director who is interested in getting you to sign the agreement. However, following the old standard of reading and understanding before you sign is still important.
Choosing a franchise is important. Hiring a competent attorney is more important for your success.