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Do you need a franchise lawyer?

On Behalf of | Aug 1, 2021 | Contracts

Franchising can be a great way to become a business owner without having to go through all the hassle and headaches associated with starting a business from scratch. However, just because much of a franchise model is done-for-you does not mean you should not do your due diligence before making the investment.

In fact, franchise contracts are often chock-full of minute details that could come back to haunt you if you overlook them. For this reason, it is always wise to retain a lawyer as soon as you make the decision to purchase a franchise. Franchise Business Review explains the various ways in which a franchise lawyer can help you.

Negotiate more favorable royalty payment terms

It is a common tactic for franchisors to collect royalty payments by automatically withdrawing them from the franchisees’ accounts. While this type of setup may make repayment easy and convenient for you, it could hurt you during financially lean times. To prevent stress during your business’s slow months, an attorney may negotiate for a more flexible payment plan.

Negotiate for more and better territory

When you sign on as a franchisee, the franchisor will give you exclusive territory in which you can do business. The contract may outline the territory in terms of a certain distance from your business’s location or by county, city or neighborhood. Regardless of the way in which the contract delineates your territory, it is crucial to your franchise’s success that you have as large of a territory as possible, and that all or part of your territory is within a population center. If it is not, a franchise attorney can negotiate more favorable terms on your behalf.

Negotiate for the right to close

If your business does not take off as planned, you may be tempted to close it down before you lose any more money. Unfortunately, your contract may prevent you from doing so.

A common clause within franchise contracts obligates franchisees to continue to operate through the end of the term that the agreement specifies. Only once the term is up may a failing franchisee sell his or her business. An attorney can negotiate for the right to close on your behalf so that you can close down sooner if necessary.

Negotiate the non-compete clause

Your franchisee contract will likely include a non-compete clause that bars you from opening another franchise or starting a similar business in the future. If you were hoping to use your franchise experience to start your own company later on down the road, an attorney can negotiate for a less restrictive non-compete clause.

A franchise attorney can prove useful at every point of business ownership. Start your business venture off on the right foot by retaining an experienced lawyer as soon as possible.