When to Engage a Franchise Lawyer

Joseph Adler, Partner, Hoffer Adler LLP • September 23, 2020

When you make the decision to purchase a franchise, you would be deciding to make a major investment of your time, money, and effort. An experienced franchise lawyer can help you to clearly understand what’s involved and how you can protect your legal interests.

If you’re new to franchising, you’ve likely noticed how much information there is to gather, collect, and evaluate. If you have already started conducting your franchise research, you have hopefully:

Assessed your strengths, skills, and previous business experience
Identified certain franchise categories that match your skills and interests
Selected a few franchise systems that you think you’re interested in joining
Received a Franchise Disclosure Document from one or more franchisors.

These are just some of the important due diligence and research activities that all potential franchisees need to conduct and complete to ensure you make a wise purchasing decision.

So, at what point does it make sense to engage a franchise lawyer?

Once you have conducted some of this initial research and you’re confident that you are ready to work with a specific franchisor, it’s time to hire a franchise lawyer.

Engage a Franchise Lawyer Early in the Process

While you are considering the purchase of a franchise, it would be helpful to have at least an initial conversation with a franchise lawyer to:

Obtain some guidance from the franchise lawyer in conducting the necessary due diligence
Avoid making certain mistakes in the early stages of the relationship with the franchisor. For example, many prospective franchisees have paid initial deposits to their franchisors, even before they have met with their franchise lawyers to review and discuss their disclosure documents
Discuss the process of becoming a franchisee, to get a heads-up on what to expect while moving along the process

For obvious reasons, you should consult with a franchise lawyer who is independent from the franchisor and you should retain a franchise lawyer before you:

Sign a franchise agreement
Make any payments to the franchisor or any of its affiliates

Furthermore, you should have an experienced franchise lawyer review the franchisor’s disclosure document, and the franchise agreement and related documents before you sign any agreement or pay the franchisor any money. Signing a franchise agreement or lease, for example, can have critical legal consequences that can prove to be costly to a franchisee. A franchise lawyer can provide important protection and advice to avoid liability and unwanted consequences.

Questions to Ask Before Retaining a Lawyer

Here are some questions that you should ask a franchise lawyer before you retain them:

What experience do you have in advising prospective franchisees, entrepreneurs looking to franchise their businesses and existing franchisors?
Is franchise law your principal area of expertise?
Will you do the work yourself or will the work be handled by someone else within your firm?
Do you communicate clearly when explaining legal issues and legal documentation to your clients?
What are your billing practices? Will you consider flexible billing arrangements and do you bill regularly so as to not surprise your clients?
How connected are you to the franchising industry and can you introduce the appropriate franchise professionals such as franchise consultants, brokers and accountants familiar with the unique issues involved with franchising?
Do you have access to an experienced litigator within your office who could assist you to defend or launch an action should the need arise?
Are you a deal-maker or a deal-breaker?
Do you have interests outside of the law that may make you a better-rounded legal practitioner?

Engaging a franchise lawyer at the right time in your franchise selection process can help you understand and work through important steps to help you make this important decision. This trusted advice and legal review can be critical to a franchisee’s long-term success.

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8 Money Questions to Ask about Your Franchising Investment

By Jim Gormley, President, The Franchise Consulting Company Canada • December 17, 2020

It’s essential to know the total costs that are involved to ensure that the franchise is a good financial option for you. So, here are eight important money questions you need to ask to ensure that you make a wise financial decision.

Why Understanding Total Investment Cost is Essential

By Jim Gormley • December 16, 2020

If you’re thinking about franchising in Canada you need to really understand the costs that you will have to pay. It’s best if you know what the costs are going to be when you start to research a franchise rather than at the end. If you know what the costs are, then you can decide what you can afford and which franchises and brands you can consider. The total investment cost will vary based on the franchise segment (for example: retail; personal services; fast food; etc) and the brand that you choose within that segment. So, What is the Total Investment Cost? The total investment cost is typically shown as a range in the Franchisor’s Franchise Disclosure Document. It is the total of the Estimated Initial Investment. The range can include fees for a wide number of costs such as: Franchise Fees Real Estate or Rent Insurance Training Computer Software Furniture/Fixture/Equipment costs These are just some of the costs among many. Be sure to find out exactly what the total investment cost covers by asking the franchisor for a full breakdown of the costs. Franchisors will be able to give you an accurate picture of what you can expect to pay.