There are many specific details and intricacies to comprehend when it comes to understanding the ins and outs of franchising. Terms and conditions may seem “standard”, but you may be headed for trouble if the field isn’t in your expertise. It may cost you a few more bucks, but it’s money well spent to hire a franchise lawyer to help you cut through the weeds.
For example, franchise law is the body of law that relates to making, operating and ending franchise relationships. It covers the laws and regulations at the state and federal level governing the binding legal franchise agreement.
Attorneys who practice franchise law help clients understand the terms of the agreements for compliance.
As a prospective franchisee, your franchisor will equip you with knowledge about the brand and must provide you with the franchise disclosure document (FDD).
The FDD is a legal disclosure document that must be given to individuals interested in buying a U.S. franchise as part of the pre-sale due diligence process. This document outlines pertinent information about the franchise, including the relationship between franchisee and franchisor. It will assist you in making your decision to choose or not choose this particular brand.
The Federal Trade Commission oversees the protection of franchising through the Franchise Rule. This is a disclosure rule that requires a franchisor offering or selling a franchise located in the United States of America to provide the prospective franchisee with the relevant information about the franchise.
Benefits of Using a Franchise Lawyer
Having an attorney look over the paperwork is advantageous, but using a lawyer that specialize in franchising will serve your needs better. They are well-versed on the rules and regulations of the industry. Understanding the terms of a specific brands’ FDD is familiar territory for a franchise lawyer. They are on the look-out for verbiage in the documentation that will benefit you, their client. They are your system of checks and balances, there to protect you. Because they likely are very familiar with many different brands, they are able to easily explain specific terms.
Necessity of Legal Advice
Even if your franchise lawyer does nothing but look over the franchise agreement, it is worth the investment. The attorney knows what to look for to safeguard you and more than anything, explain terms to you.
It’s advised that you read the franchisor’s FDD, look through it, then write questions and notes about clarifying certain terms. Not only can your representative address those points, but also red flag anything that seems out of the ordinary. From the time you receive the FDD, to signing the agreement, you have a 14-day window.
Again, a lawyer who deals with the franchise industry day in and day out is also going to understand whether or not a certain brand will fit your needs. They are hired to look out for your best interest.
Besides having a keen eye looking over franchise documents, you may seek counsel to negotiate terms with a franchisor. Keep in mind, most franchises, especially established brands, simply do not negotiate in the interest of keeping everything fair, equal and uniform across the board for all franchisees.
But a legal advocate is there to offer guidance, and if you’d like, negotiate terms.
Most often, the terms that might be open for discussion include:
- Royalties and how they’re paid
- Right of first refusal: to buy back the franchisee’s unit.
- Litigation statute of limitations: in case there is a dispute between the franchisee and franchisor, allowing for mediation time.
- Non-compete clause
- Franchise territory: specifying exclusivity
Franchising with Wild Birds Unlimited
At Wild Birds Unlimited we are very transparent about the terms of our agreement with owners of our 350 franchise locations. We make the process of ownership very clear. We want you to be comfortable with your decision and enjoy running your business. Wild Birds Unlimited is a great fit for people who want to come to work every day, enjoying serving their community as a resource for wild bird watching hobbyists.
In fact, one of the steps of our Franchise Development process is to schedule a long, often nearly 2 hours, to go over the FDD in great detail to ensure that you have a full understanding of the document so that it is easier for you when you go over the FDD with your legal counsel.
Our franchise system includes a discovery process to become a Wild Birds Unlimited franchise store owner. That process is an estimated 45-60 days that you spend with our development team.
We want to ensure that your ownership will be beneficial for you and us. Once we determine that Wild Birds Unlimited is the right fit for you, you will be invited to sign a Franchise Agreement. If you choose to hire an attorney to protect your interests, we respect that. Once your agreement is signed, the fun begins with the site selection process.
If you are ready to get started, fill out the application you can find here on the website and our development team will get the conversation started about joining our flock.