Steps to Buying a Franchise | Internicola Law Firm

Steps to Buying a Franchise

Buying a franchise is all about creating opportunity for yourself and building a business that, in time, will serve you and your family. As a franchisee, the business that you will be building will be dependent on the legal rights granted to you in the franchise agreement and the disclosures contained in the FDD. To maximize your chances for success, to avoid pitfalls and to protect franchise rights, you must engage in a due diligence process.

From a business perspective, your due diligence must involve the evaluation and validation of the franchisors business model, the support offered by the franchisor and the experiences of existing and former franchisees. From a legal perspective due diligence mandates a thorough review of the FDD and a franchise agreement, negotiations with the franchisor and franchise agreement amendments focused on preserving your franchise rights and ensuring that your business expectations match up with the legal rights, obligations and restrictions contained in your franchise agreement.

Franchise Agreements Are Negotiable

Before we get started in discussing the steps to buying a franchise, it is critical for you to understand and know that franchise agreements are negotiable. Much more often than not, every day franchise agreements are modified through an addendum process before a franchisee signs off on a franchise agreement.

Steps to Buying a Franchise

The steps to buying a franchise must be focused on business due diligence and legal due diligence. Business due diligence must be focused on your evaluation of the franchise opportunity, the industry, unit economics, your financial resources and the experiences of other franchisees. Legal due diligence must be focused on the FDD disclosures, the franchise agreement, franchise agreement negotiations and how your legal rights match up to your business expectations.

Our Process

1. Understanding Your Expectations

The first step is for us to understand and learn about you, your franchise expectations and the franchise opportunity that you are considering. During our initial conference call we will discuss:

Our approach to the review of your FDD and franchise agreement and the eventual franchise agreement negotiations and modifications will greatly depend on who you are, your goals and your franchise expectations.

2. FDD and Franchise Agreement Legal Review and Assessment

Having gained an understanding of your expectations and what the franchise investment means to you, in step 2 we engage in a thorough and detailed review of the FDD and franchise agreement. Our review process includes preparation of a detailed written FDD and franchise agreement assessment, recommendations and proposed franchise agreement modifications. In our review and assessment we address issues that include:

To learn more about our FDD and Franchise Agreement Review, click here.

3. Preparation of Proposed Addendum to Franchise Agreement

Upon completion of our FDD and franchise agreement review and assessment we prepare a proposed addendum to the franchise agreement. This “addendum” is a two to five page document that we prepare as a proposed supplement to the franchise agreement. Within the addendum we address legal issues that we believe may be successfully negotiated. This addendum is not finalized until you review our FDD and franchise agreement assessment and we speak about proposed modifications that you would like to make to the franchise agreement. Issues that are commonly addressed in our franchise agreement addendums, commonly include:

4. Planning and Strategy Session

Once you have had an opportunity to review our written FDD and franchise agreement review and our proposed franchise agreement addendum we will schedule a call or number of calls to discuss everything. During this process we will be working together to identify additional items that may be important or unique to you and to finalize a strategy for how we will approach negotiations with the franchisor and the final addendum that we will present to the franchisor.

5. Franchisor Negotiations

How we approach franchisor negotiations has a lot to do with the particular franchisor, you and the relationship that you have had with the franchisor’s sales team. Depending on what is right for you and your situation, we may approach the negotiation process directly where we exclusively deal with the franchisor or your behalf or where we work together in joint communications with the franchisor. Either way though, we guide you through the entire process ad the center-point for the negotiating process is the proposed franchise agreement addendum that we prepared.

6. Franchise Closing or Conclusion

If everything goes well and negotiations reach a result that is acceptable then the next step is to proceed with your franchise closing which will involve your signing of the franchise agreement, our franchise agreement addendum and other exhibits to the franchise agreement. We guide you through the entire process and review it every step of the way. Keep in mind and consider that sometimes a good franchise decision may be to walk away and not proceed with a franchise investment. There are many reasons why proceeding may not be right for you and if they occur we will be sure to candidly discuss your concerns and give our input. For us, successfully representing our clients also includes franchise transactions where, sometimes, they need to walk away.

Post Closing Support

If you ask our existing client, we are here for your long term success. If you ever have any questions about your franchise transaction, always know we are here for you. Many of our clients continue to work with us after their franchise closing in a number of additional transactions including lease agreements, establishing additional franchise units and other business matters.

More Information

Back to Buying a Franchise

Let's Talk

With services to make your growth strategy simple, cost effective, and with a team excited to help you, let’s talk about how we can help grow your brand. Click on the button below or call us at (800) 976-4904.

Top Resources for Franchising Your Business

  • videoImg

    Should You Franchise Your Business?

    Franchising may be the next big step for your business and brand. So, how do you know whether or not you should franchise your business and if franchising is right for you? The answer depends on your business, your business goals, your personal goals, your budget and where you want... read more

  • videoImg

    How to Franchise Your Business

    In this guide you’ll learn the basics of franchising, how to franchise your business, and how to win at franchising. We’ll also take a deeper dive into legal requirements for franchising and why they matter, steps to take before and after you launch your franchise, and even some tips on... read more

  • videoImg

    Franchising vs. Licensing Book

    When considering expanding a business both franchising and licensing are possible options. In this guide, you'll learn the differences of franchising and licensing and understand how each will affect you. read more

all guides

  • None right now

all videos

  • videoImg

    Franchising Your Business: Advantages & Disadvantages

    Are you a successful business owner? Are you looking for ways to expand your business? If so, this article will provide the answers you need to decide whether franchising your business is the right step for you. In short, franchising allows you, the franchisor, to create a relationship among several... read more

  • videoImg

    Documents To Start A Franchise

    Under federal law, prior offering or selling a franchise in any state, franchisors are required to disclose a franchise disclosure document (FDD) to their prospective franchisees. In addition to federal law certain states, including the franchise registration states, require that franchisors register their FDD with the state. The legal documentation... read more

  • videoImg

    Is Your Business Franchisable?

    If your business is successful and you are looking to expand, for good reason, you may be asking questions like “is my business franchisable?”, and “can my business be franchised?” To answer these questions and determine whether or not your business is ready for franchising, you should evaluate the following... read more

all articles

  • videoImg

    Leveraging PR & Digital Media to Jumpstart Franchise Sales

    Key strategies to accelerate franchise growth for startup and emerging franchisors In this webinar, franchise attorney Charles Internicola and Nick Powills, founder of No Limit Agency and 1851 Franchise, discuss key strategies to accelerate franchise growth through PR and digital media. Some topics include: Steps franchisors should take when it... read more

  • videoImg

    Winning Insurance Strategies for Emerging Franchisors with Michael Porpora

    One of the biggest issues for emerging franchisors is not having a plan for insurance and system-wide protection. What do emerging brands need to know when they're starting off, who should they rely on, and how can they plan ahead? Get an insurance game plan to protect your franchise system... read more

  • videoImg

    How to Build a Great Franchise Logo & Brand with Dan Antonelli

    Key strategies for developing the right logo & trade dress to drive franchise growth with branding and design expert Dan Antonelli. Dan is the author of ‘Building a Big Small Business Brand’ and is the creative director of the branding firm KickCharge Creative. Learn how to drive franchise growth and... read more

all webinars

Let’s Talk

With services to make your growth strategy simple, cost effective, and with a team excited to help you, let’s talk about how we can help grow your business.

Fill out the following form and we’ll contact you as soon as possible. To reach our team directly, give us a call at (800) 976-4904.

An attorney client relationship is not established by submitting this initial contact information.