If you have questions about franchise lawyers, what they do, how they can help, the cost, and how to select the right franchise lawyer for you, 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. When selecting and hiring a franchise lawyer, you should:
- Learn what franchise lawyers do
- Learn what the franchise laws are
- Evaluate the franchise lawyers experience
- Understand the difference between franchise lawyers and franchise developers
- Evaluate franchise lawyer fees
What Franchise Lawyers Do?
Franchise lawyers advise and represent individuals and businesses on legal issues that involve franchising a business, preparing an FDD, filing and renewing FDD registrations, buying a franchise, and litigation involving the franchisor and franchisee relationship. The role of a franchise lawyer varies depending on whether he or she represents the franchisor or the franchisee.
When representing a franchisor (the company that offers and sells franchises) the franchise lawyer will provide legal advice related to issuing and registering the franchise disclosure document, preparing franchise agreements, and other issues that involve the legal relationship with franchisees. When representing a franchisee (the individual or business that buys a franchise and, eventually, develops and operates a franchised location) the franchise lawyer will provide legal advice related to reviewing the FDD, reviewing and negotiating the franchise agreement, and protecting the franchisees rights in the underlying franchised business.
What are the Franchise Laws?
The franchise laws are a combination of federal and state laws that regulate the offer and sale of franchises and the legal relationship between franchisors and franchisees. At the federal level, the FTC has issued the Federal Franchise Rule that requires franchisors to issue and disclose to prospective franchisees a pre-sales disclosure document called a franchise disclosure document” or “FDD”. At the state level, there are certain states that have enacted franchise laws and regulations that supplement the federal requirements, impose additional disclosure obligations on franchisors, and regulate the franchisor-franchisee relationship. Learn more about the franchise laws.
Evaluating a Franchise Lawyers Experience
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. It's important to select a lawyer that specializes in franchise law and that is actively involved in the franchise community.
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 is an important factor to consider. Also 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, consider client reviews and references and, the lawyers dedication and commitment to franchising.
Understand the Difference Between Franchise Lawyers and Franchise Developers
If your interested in franchising your business, chances are that as you research your options you may be considering services offered by franchise developers. Franchise developers, also referred to as franchise consultants, are businesses that offer services that may help you franchise your business. Franchise developers typically provide non-legal services such as the preparation of your operations manual, and strategic planning.
Franchise developers are not franchise lawyers and since the FDD is a legal document, franchise developers cannot and should not be relied on to prepare your FDD. Beware of franchise developers and franchise consultants that offer "FDD preparation services" or that claim to have in-house attorneys that will prepare your FDD. Franchise developers do not possess the legal authority or experience to legally prepare your FDD and assist you in complying with the franchise laws. Learn more about the differences between franchise lawyers and franchise consultants.
Evaluating a Franchise Lawyers Fees
Franchise lawyer fees include traditional hourly billing and, depending on the law firm, fixed fee project based billing. Fees will vary depending on the tasks and whether or not you are a franchisee interested in buying a franchise, or a franchisor interested in franchising your business or complying with the franchise laws.
When considering and evaluating franchise lawyer fees, ask for a written proposal outlining the legal services involved, billing rates, and whether or not fixed fee project based billing is available. When available, preference should be given to fixed fee project based billing.
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.
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