By the time you contact our firm you may have developed a personal relationship with the franchise salesperson and are excited to invest. You may be filled with expectations of a long, successful and cooperative franchise relationship. You may have met other franchisees and are optimistic about joining their ranks. You are focused on how your life will look if things go right with the franchise.
It’s our job to describe how your life will look if things go wrong by showing you how specific elements of the franchise agreement will work. We will invite you to carefully go over the costs of the initial investment, the amount they will be paying in royalties and likely operating cost. We talk about what it means to “break even”.
We will help you understand the massive document you have been given called a Franchise Disclosure Document (FDD) and the document you will be required to sign called a Franchise Agreement. You may be required to sign other documents as well and our role is to help you see how each document both helps and binds you.
By way of example, if you believe you will succeed because the franchisor will support you every step of the way, we may point out the section of the FDD where the franchisor lists the finite amounts of support it is agreeing to provide and the amount it will charge for any “additional” support. It may be that the franchise agreement states that any other support is “discretionary” and we will help you understand that you may never receive it.
If you contemplate that you would like to pass the franchised business on to your children, we may point out the strict limitations and prohibitive costs of transferring the franchise.
Our job is to help our clients carefully think through the universe of possible outcomes. In decades of advising franchisees after they invested, no one has ever said they wish they hadn’t thought of worst case scenarios before they decided to invest. Most say they wish someone had told them—but, with embarrassment admit they never consulted a franchise attorney.
Let us help understand what you are purchasing and, where necessary, help you negotiate changes that will enable you to be more comfortable entering into such a significant business relationship.