You have made the decision: you wish to begin your own business. You’ve sorted through the idea of starting your own business as a sole proprietorship, perhaps maybe even a partnership. Of course at some point you may think about other concerns such as how do I get the word out about my business or will the process I choose to run the business be feasible and functional? If these thoughts have crossed your mind, you may wish to consider the idea of aligning your business with a franchise.
The control is one of the important elements that moves people to open their own business, in opposition to opening a franchise. With your own business, you have control over the major decisions regarding the business, where as with the franchise there are rules and policies set up by the franchisor that all franchisees will be required to follow. However, a franchise can be a great idea for individuals who are just starting up for one main reason – branding.
A franchise comes with its own brand, some that have been set up over decades. For example, consider the idea of opening up a fast food franchise. Some of the major chains have been around for decades upon decades and already have a strong following that, as a franchisee, you do not need to worry about creating.
So, you meet with some franchise owners and finally choose the right franchise to open! You are ready . . . But, like all businesses, you need a team of advisors to help you. The lawyer will be a crucial element in your team, but more valuable is a lawyer that knows everything about franchising.
Like many areas of the law, franchise law can be complicated. A franchise attorney can help guide you through the many steps required before it can be set up and running.
For instance, under the law, all franchise owners are provided with a Franchise Disclosure Document, that offers crucial information about the franchisor. However, this document can be upwards of 200 pages long, and a franchise attorney who is experienced with these documents can be quite helpful in sifting through all the information and focusing on what is truly important.
Your franchise attorney can also help explain any potential legal pitfalls that the document contains, and he will be your best asset in negotiating these agreements.
A franchise attorney can also help with the corporate aspect of the franchise. These experienced individuals can counsel you and explain whether it will be more beneficial to set up the franchise as an S-Corporation or a partnership structure, for example.
Throughout the process, the franchise attorney will be in your court. He or she can help negotiate with the franchisor regarding the terms and conditions of both the Master Franchise Agreement, and any terms and conditions that are not favorable to you under the Franchise Disclosure Document.
Lastly, franchise attorneys are knowledgeable about franchise law, both federal and state regulations. Depending on the state you are in, regulations regarding franchises may be different, and it is important to have an experienced person help guide you through the different legal terms.
Therefore, when deciding whether to align with a franchise or start a business from scratch, make sure to weigh the importance of independence against the branding and system in place with the running the business. And if choosing a franchise is your direction, make sure to have a knowledgeable and experienced franchise attorney on your side