Franchisors and franchisees can get lulled into complacency when entering a franchise transaction. Franchisors may rationalize foregoing legal representation because they had a franchise business attorney prepare the original paperwork that is reused for each new franchisee. Similarly, franchisees may likewise skip legal representation because they believe that the terms of the agreement are fixed and not subject to negotiation or input from the franchisee.
However, franchisors and franchisees who enter a franchise agreement without a franchise business attorney miss out on valuable legal knowledge and experience that can reduce disputes and minimize costs over the long run.
What Can a Franchise Business Attorney Contribute to a Franchise Transaction?
Like many other states, Utah does not certify legal specialists. However, lawyers and law firms that focus their practices on franchise law have a unique insight that benefits both franchisors and franchisees.
1. Franchise Business Attorneys Have Knowledge of Franchise Law and Procedures
Franchise law sits at the intersection of many fields of law, including contract law, trademark law, and unfair competition law. What sets franchising apart from other business transactions is that franchise transactions are governed by a complex interplay of federal and state law.
The U.S. Federal Trade Commission (FTC) regulates the form and content of the franchise disclosure document (FDD). The FTC’s “Franchise Rule” is incredibly complex and covers nearly 31 pages in the Federal Register.
Complicating franchise transactions further is the patchwork of state laws that govern franchising. States cannot reduce the burdens of the Franchise Rule on franchisors. However, states can impose additional requirements as long as those requirements do not conflict with it. Thus, a franchise business attorney is critically important to ensure compliance with each state’s franchise laws.
2. Franchise Business Attorneys Provide Experience in Franchising Transactions
Unless you are an experienced franchisor or franchisee, a franchising transaction will be different from any other transaction you have ever conducted. A franchise business attorney can guide and advise you throughout this process. Their experience can help you to identify potential pitfalls and craft solutions to avoid or mitigate them. Moreover, an experienced franchise business lawyer may have even dealt with your franchisor or franchisee before, providing you with strategic insight into how the business relationship will work after the franchise transaction is completed.
3. A Franchise Business Attorney Could Save You Money
While it might seem counterintuitive, hiring a lawyer could help you save money in the long run. A successful transaction is not necessarily one that creates a dispute-free relationship. Rather, a successful transaction anticipates possible disputes and provides mechanisms for resolving them without resorting to expensive and time-consuming litigation. Franchise business attorneys leverage their knowledge and experience to spot issues before they become issues and creative ways to address them.
Finding a Franchise Business Attorney
Since you will need a franchise business attorney with knowledge and experience, you should seek out a lawyer who has focused on franchising transactions for a good part of their career. Moreover, lawyers who have written or lectured on franchising law not only understand the nuts and bolts of franchising but have thought about the legal theory underlying it. These insights into how franchising is supposed to work can be invaluable in a franchising transaction.
Contact us to discuss your franchising transaction whether you are a franchisor or a franchisee.