Should You Let A “Franchise Consultant” Prepare Your FDD?
Should You Let a “Franchise Consultant” (Not a Franchise Lawyer) Prepare Your FDD and Franchise Your Business?
Well‚ in his article “Why Franchise Consultants Shouldn’t be Drafting your Disclosure Documents” Canadian franchise lawyer Tony Wilson does a good job of explaining why your answer should be “no”. For Tony‚ selecting “franchise consultant” to prepare your FDD is sort of like selecting a baker (instead of a dentist) to perform a root canal. Tony does a good job of explaining why and the biggest “whys” include facts including:
- Franchise consultants are are not legally trained but are [indeed] attempting to provide legal advice;
- Franchise consultants do not have to keep up with on going case law and legislative changes [you know- the ones that if you don’t follow you will get into trouble];
- There is no professional body that regulates franchise consultants;
- There is no discipline process for them in the event of incompetence or professional misconduct; and
- They are not insured for any mistakes or malpractice that may occur.
Both as a franchisor and as a franchisor lawyer‚ I can tell you that the biggest reasons on why you should be working with a franchise lawyer when preparing your FDD relates to “accountability” and “specialization”. Sure franchise consultants do have a role but I can tell you that it is “not” drafting FDD’s. Certain Franchise Developers (but certainly not all) recognize this critical distinction and many times (in my opinion) they attempt to confuse the consumer by “incorporating the FDD development” into some overall consulting and development fee. They will even tell you that they have their own attorneys who can prepare your FDD. To learn more about the distinction‚ checkout my article “Franchise Consultants versus Franchise Developers” and a “thank you” to our friend up North for putting out this great information.
By Charles Internicola December 2, 2013
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