What Is The Cost To Have A FDD Reviewed By A Franchise Lawyer When Purchasing A Franchise?
Complete fixed fee franchisee representation that covers the entire franchise purchasing process
If you’re buying a franchise, one of the first steps is having the Franchise Disclosure Document (FDD) reviewed by a franchise lawyer. If you’re buying a single unit franchise, our FDD Review fixed fee is $2,500. Learn more about our process and FAQ’s below.
What Our FDD Review Covers
Our franchisee legal representation is seamless from start to finish. We provide the following in our fixed fee:
- Unlimited consultations
- FDD Review Letter
- Communications and negotiations with the franchisor
- FDD Signing
- Ongoing consultations with franchisee, franchisor, and all related parties including franchise brokers
- Everything franchise related from initial call to signing the franchise agreement
- Single Unit Purchase – Fixed Fee: $2,500
- Multi-Unit Purchase – Fixed Fee: $2,750
Frequently Asked Questions about our FDD Review Process
1. Does the process include a review of the Franchise Agreement in addition to the Franchise Disclosure Document (“FDD”)?
Yes, there are a number of agreements within an FDD, including the Franchise Agreement. Our review will include all of the legal documents within the FDD, including the Franchise Agreement, which you will ultimately be signing if you decide to move forward with the franchise.
2. How long does the process take?
We will have the review complete and the summary letter in your email inbox within five (5) business days from the date we receive the documents from you and you confirm that you would like to move forward. Once the review letter is complete, our team will schedule a call with one of our attorneys to discuss the contents of the review letter. Depending on your availability, the initial review call typically takes place within a day or two of the review letter being completed and sent to you. Once the initial review call takes place, the timing and next steps will vary depending on a number of factors. On average, the entire process from the commencement of the review to signing the Franchise Agreement takes approximately two weeks. If there is a specific need to expedite the process, we can usually accommodate a quicker timeline upon request.
3. How much does it cost?
For a single unit franchise purchase, our fixed fee is $2,500, no matter how much time we spend on the project. If you are developing multiple units of the franchise simultaneously, our fixed fee is $2,750. This will include everything related to the FDD and Franchise Agreement, including the review of documents, preparation of the review letter, unlimited telephone calls/correspondence with you, and communications/negotiations with the franchisor’s legal counsel regarding any questions you have or modifications to the Franchise Agreement that we propose, if needed.
4. Can we make changes to the Franchise Agreement?
It depends. The need to maintain consistency throughout each franchise system is important, so, the standard practice for most franchise systems is that they will not agree to make modifications to the terms of their Franchise Agreement. That is, from the franchise industry standpoint, it would not be good to have different terms in each of the franchisee’s Franchise Agreements, as the lack of consistency will hurt the brand. Although there is truth to that sentiment, whether a franchisor will agree to make modifications to the Franchise Agreement depends on a number of factors. Ultimately, the biggest factor relates to the bargaining position held by the franchisor. Typically, the larger the system, the more bargaining power they would have, and the less likely they would make changes.
5. Is having an FDD reviewed by an attorney required?
There is no requirement that you hire an attorney to review the FDD on your behalf. However, it is highly recommended that you are fully informed about the franchise relationship and the obligations you and the franchisor will have under the Franchise Agreement prior to signing the Franchise Agreement. There are many potential “life-altering” outcomes (good and bad) that could result from signing a Franchise Agreement.
6. Are communications with the franchisor’s attorney included in the fixed fee?
Yes. All communications, whether it be questions asked to the franchisor, communicating proposed terms made to the Franchise Agreement, or other negotiations to any agreement within the FDD, are included in the fixed fee.
7. What is not included in the FDD Review Program?
The FDD Review Program is limited to information and issues directly related to the FDD and your relationship with your franchisor. As part of your investment in the franchise, you may be in need of additional legal services that are not included in our FDD Review Program. Some common related projects include: (i) setting up your corporation or limited liability company; (ii) review and negotiation of your lease agreement; and (iii) preparation of the agreement between you and your partners (shareholder agreement or operating agreement). Although these services would not be included in the fixed fee, we have strategic partnerships with law firms that can provide these services in the event you require them. If you would like more information about this, please let us know.