Franchising Pitfalls: Potential Legal Issues for New Franchisors

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Franchising can be an effective business growth strategy, but with all the legalities involved, becoming a success as a new franchisor is certainly no easy task.

Every business venture comes with risks, of course. However, because the state and federal laws that govern franchisors are both complicated and unforgiving, getting assistance from an experienced business law and franchise attorney is essential.

New franchisors face many potential legal issues in trying to build a franchise system.

Fortunately, these and other franchising pitfalls that can be avoided with advice and guidance from a franchise law expert.

franchisor legal issues

Franchise Disclosure Document Errors

The franchise disclosure document (FDD) is intended to give prospective franchisees the information they need to make an informed decision. Mistakes in this crucial piece of franchising paperwork can lead to costly lawsuits, but the risk is minimized for new franchisors who have the FDD crafted by an experienced franchise attorney.

Liability for Franchise Actions

Errors made by a franchisee or one of their employees – even those seemingly unrelated to the owner of the franchise system – carry some risk of franchisor liability. If the burden of responsibility for an action shifts to the franchisor, an expert in business and franchise law can navigate the legal hurdle with minimal damage.

Lack of Franchisee Support

New franchisors are often unaware that franchise laws may require them to provide a certain level of support to their franchisees – and the perception of inadequate support could give rise to legal action. Experienced franchise attorneys know how to precisely define the amount of provision in the franchising agreement, so that everyone understands exactly what’s expected.

Differences in Franchising Laws

Franchising laws at the local, state and federal levels aren’t always consistent. Once your business expands across domestic and international borders, the rules may have significant differences. By working with an expert in franchise law, franchisors can avoid the potential legal headaches of franchising in a new region.

Changes in Franchising Laws

The differences in franchising laws are difficult enough for new franchisors – add in the fact that legal regulations can change at the drop of a hat, and you can see why a franchising expert is a must. Attorneys that specialize in franchise and business law stay apprised of new governmental rulings in order to mitigate their effects on franchisors.

Franchise systems are always at risk for legal issues, but with expert advice, franchising can be a profitable business expansion option. For anyone thinking of becoming a new franchisor, working with an attorney who understands the ins and outs of franchising is the safest approach.

If you’re ready to enter the franchising industry, the award-winning attorneys at the Franchise & Business Law Group can protect your legal interests and provide you with forward-thinking advice on business expansion.

Our attorneys are committed to providing superior legal service, and our legal team has decades of experience in franchising. The Franchise & Business Law Group has what it takes to meet your needs as a new franchisor, and you can count on our assistance down the road as you continue to expand your business.

For more information on our services for new franchisors, or to discuss franchising with one of our franchise law experts, contact our Salt Lake City, Utah, office and schedule a consultation today.