In my last post, I discussed the process of buying a franchise, and I explained that the process takes time. But when during that process should you consider hiring a franchise attorney? I get this question routinely, so I am sharing my thoughts here.
The answer is that while a franchise attorney should always be consulted prior to signing the franchise agreement, there is no standard time to retain counsel. One of the primary roles of a franchise attorney is to advise potential franchisees about risks and to help them understand their obligations if they join a system. Franchise attorneys can provide this assistance at any time prior to the signing of the franchise agreement because until that agreement is signed, the franchisee is not assuming any new obligations.
However, as a practical matter, it makes sense to engage a franchise attorney after receipt of an FDD, because the FDD lays out the information the attorney needs for an effective review. At that point, a capable franchise attorney can point out risks and other issues inherent in the deal. Depending on the attorney’s review, you may decide to move on to another franchise with less risk. Many franchisees are hesitant to do this after they have spent legal fees. However, it is important to keep the proper perspective. Getting involved in a bad deal can cause huge headaches down the road. The decision not to proceed in a certain direction is often more important than deciding to move forward.
It is also very useful to have legal advice prior to Discovery Day. This way, you can bring your questions with you and get them answered in person. However, as I mentioned in my prior post, you should be sure to save the “juicy” questions for in-person meetings, rather than in group sessions.
For franchisees considering multiple concepts, it makes sense to bring all of the FDDs to a franchise attorney for review. A franchise attorney can spot differences between the concepts, and help you decide which concept might make more sense from a legal perspective.
And, most importantly, it is vital to have legal assistance prior to signing a franchise agreement. While having an attorney review the agreement after it is signed has certain educational benefits for franchisees, there is usually nothing that can be done after the ink has dried.
If you have any questions about this topic or any other franchise law issue, please contact Brian Loffredo at
ABOUT BRIAN LOFFREDO
Brian is a commercial litigator with more than seventeen years of experience representing clients in the franchise industry. Brian routinely assists clients during the licensing and franchise/FDD review process, as well as with the resolution of franchise-related disputes, including those involving terminations, territorial disputes, fraud, disclosure/relationship law violations and breaches of contract.
In addition, Brian represents and counsels clients in the construction industry on matters involving litigation, construction defects, licensing and compliance, collections, mechanic’s liens, payment bond and Miller Act claims, contract drafting, and compliance with home improvement laws and other construction industry laws.
Brian also has extensive experience representing financial institutions with workouts, collections and residential / commercial foreclosures.
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