If you have questions about franchise lawyers, what they do, how they can help, the cost, and how to select the right franchise lawyer, then this guide will help.
A franchise lawyer is a lawyer with specialized experience and knowledge on legal issues involving federal and state franchise laws. Franchise lawyers advise and represent their clients on legal issues that include franchising a business, preparing a FDD, filing and renewing FDD registrations, buying a franchise, and litigation involving the franchisor and franchisee relationship. Within the legal industry there are no fixed rules as to what qualifies a lawyer as a “franchise lawyer.” The quality and level of experience of each franchise lawyer varies depending on his or her own experience and his or her level of dedication to franchising.
Before selecting and hiring a franchise lawyer, we recommend:
Franchise lawyers are experienced in knowing and applying the franchise laws and are experienced in representing franchisors and franchisees. The term “franchise law” is a broad term that is a catch-all phrase for multiple areas of federal and state-specific laws that regulate or relate to activities involving franchising, licensing, and business opportunities.
At the federal level, the FTC has issued the Federal Franchise Rule that, generally, requires franchisors to disclose prospective franchisees with a disclosure document (called a “Franchise Disclosure Document” or “FDD”) before they sell a franchise. The purpose of the Federal Franchise Rule is to protect prospective franchisees by providing them with uniform information and data about their potential franchise investment. At the state level, there are states that have enacted their own franchise laws that supplement the protections provided by the Federal Franchise Rule and, in certain instances, impose franchise registration or filing requirements on franchisors. There are other states that haven’t enacted their own franchise laws but have enacted “business opportunity laws” that serve a similar purpose and that must be satisfied by franchisors.
In summary, franchise law is an accumulation of federal and state laws that regulate the activities of franchisors and that are intended to provide protections to franchisees before they buy a franchise and even after they become franchisees.
What a franchise lawyer does and the services that he or she provides is determined based on whether or not he or she is representing the franchisor or the franchisee. The “franchisor” is the person selling a franchise and the “franchisee” is the person buying a franchise. Below, we discuss the different roles:
Franchise law is a specialized area of the law and its important to select a lawyer that specializes in franchise law and is actively involved in the franchise community. In addition to evaluating the percentage of the lawyers practice dedicated to franchising, also consider and evaluate his or her membership in membership and industry associations and organizations dedicated to franchise law.
Within the legal community, the American Bar Association Forum on Franchising is one of the most recognized and influential franchise-industry-specific forums for franchise lawyers. The ABA Forum on Franchising maintains active list-serves, conferences, and continuing education events dedicated to franchise law, and an attorney’s membership within the ABA Forum on Franchising should be a determinative factor to consider. Another factor to consider is whether or not the attorney is a member of the International Franchise Association (the “IFA”). The IFA is the most recognized trade association for the franchise industry, and its membership includes franchisors and franchisor suppliers. An attorney’s membership in the IFA as a paid supplier member should be considered in evaluating the attorney’s commitment and dedication to franchising.
In addition to an attorney’s participation in franchise-specific trade associations, third-party recognition of the attorney’s experience in franchise law is another factor that should be considered. Super Lawyers, published by Thompson Reuters, maintains an active listing of peer-reviewed franchise lawyers designated and selected by Super Lawyers based on “…indicators of peer recognition and personal achievement…” Recognition by Super Lawyers, although not determinative, should be another factor that is considered.
The most common fee structure model within the legal industry is hourly-based billing. However, within the franchise industry, many franchise lawyers and franchise law firms offer fixed-fee project based billing.
When working with franchise lawyers that offer fixed fees, the typical fixed fee for franchisee representation involving FDD and franchise agreement review and negotiation ranges from $1,500 to $2,500 and the typical fixed fee for FDD development and franchising a business ranges from $15,000 to $45,000. Franchise lawyers that charge based on hourly billing, typically set their rates between $300 and $700 depending on the size of the law firm and the complexity of the representation.
Learn more about our fixed fee franchise development services to franchise your business and our fixed fee FDD review services to buy a franchise.
So, when hiring a franchise lawyer, evaluate their fee structure and ask if they offer fixed-fee or project-based billing.
If you are evaluating a few franchise lawyers and they all seem to “check the box” on the items that we’ve discussed, then consider the intangibles such as the personal relationship that you develop, whether or not they are focused on your goals, their team commitment to helping you grow your brand, and the timeliness of their communications.
The good news is that within the franchise industry there are some amazing franchise lawyers who are committed to the industry and their clients. So, take some time and find the right fit for your business.
To learn about why we may be the perfect franchise lawyers for you and how we can help you grow your business, give us a call at (800) 976-4904 or contact us.
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