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Franchise Development Companies and Franchising Your Business

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So‚ bare with me here a little – because this topic keeps coming up and has raised some concern on my part.

[CAUTION] I get calls all the time from individuals who have attempted to franchise their business and they run into some type of “franchise develoment company” that claims to do it all‚ FDD’s‚ Franchise Agreements‚ Feasibility Studies‚ Operations Manuals and‚ even‚ websites.  They claim “to have their own attorneys” but are not clear about how they work out the whole franchise law and franchise regulation “thing.” For many of the clients that contact me‚ they are left with nothing other than “some cut and paste form” that does much more harm than good and creates a road map to a destroyed business.

Why am I writing this post? Granted because I am slightly annoyed and  I just got off the phone with one of the many business owners who call me with problems after getting the wrong advice from an alleged franchise professional. This individual explained to me some serious problems she was encountering after she thought she hired a franchise lawyer and‚ in reality‚ she had hired a franchise “developer” who previously was a web designer.

Don’t get me wrong‚ like franchise lawyers‚ there are some extremely reputable and imminently qualified franchise developers‚ but there are far too many alleged developers who do not know what they are doing.  Worse‚ they are misrepresenting their services as all inclusive‚ including legal.

So here are some [WARNING SIGNS]:

  1. Avoid developers who claim they will do everything and that there is nothing for you to do.  Why? Because franchising is an active development process that requires your input and a working relationship between you and your lawyer.
  2. If you are confused about whether or not a developer is also a lawyer‚ consider that this confusion is intentional and‚ in certain cases‚ a deception.  Many developers claim they “work with their lawyers” so you don’t need to spend the money.  Worse‚ they imply that their lawyers (who are mostly outside lawyers who don’t care about you or your business goals) will work for you. Why is this wrong?  Well consider that if the lawyer does not work directly for you‚ who will be accountable to you years later if there is a problem with your FDD.  Not the development company and not their franchise lawyer.  What will they claim? They will claim that you had the right to choose your own lawyer but you declined to do so – basically you will be on your own.
  3. So How Can you Put Together Both the Business and Legal Components to Franchising. You start with a qualified franchise lawyer and professional who can offer you a complete package.  Hey‚ I don’t know everything but I can sure tell you that you need a qualified franchise lawyer to protect you and to do this “directly” as your lawyer.  Also‚ a qualified lawyer and franchise professional can guide and help you as to the business elements that you need to address.  By the way‚ in addition to being a franchise lawyer‚ I am also the managing member of a national franchise company and I would be glad to share some of my experiences with you.

SO BEFORE YOU DO ANYTHING:  (A) Arm yourself with accurate information and read The Ultimate Guide to Franchising Your Business; and (B) Read Should You Franchise Your Business?

By the way‚ my office is constantly receiving “disguised” emails from franchise developers requesting our materials. I am ok with that‚ but I wish they would be upfront about it.

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By Charles Internicola January 28, 2013

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