HOW TO FIND THE RIGHT LAWYER
Top legal tips that will save you money.
About to buy a franchise? Find out why a specialised franchise lawyer is essential to help save you time, money … and maybe even your business.
It is impor tant for franchisees to get the right advice before committing t o a f ranchise t hey have selected.
The key is to seek advice from a specialised franchise lawyer who is a member of the Franchise Council of Australia (FCA), the national industry body for the sector.
As a prospective franchisee, getting the right advice both financially and legally is essential to reduce your risks so you can make an informed decision before you commit.
The reality is that once you are in a franchise there is no easy exit without crystallising a loss – and that loss could
be significant.
A specialist franchise lawyer can identify the key and real commercial issues you should be aware of.
Those issues involve more than just the up-front costs. What happens when you want to sell the business? Are there any restraints when you sell or on expiry of the agreement from continuing in the same business? How does the marketing operate, and who pays? Is there a marketing fund? How does the supply chain work? Do you get a territory or is it site specific? Is it an exclusive or non-exclusive right?
There are many tricks and traps that your franchise lawyer can highlight.
WHY CHOOSE A SPECIALISED
FRANCHISE L AW YER?
Lawyers focus on risk and some are more commercial or risk-averse than others.
The role of a franchise lawyer is to highlight the risks so the client can make an informed decision or be given the opportunity to negotiate concessions into the agreement with the franchisor.
The reality is that new franchisors in the market are more likely to be open to negotiation than longstanding franchisors who already have an established reputation.
Lawyers who are not experienced franchise lawyers often focus on issues that are really not the key issues.
They get caught up in the language or grammar, not the substance of the agreement.
The sale of an existing business is a complex transaction due to the number of parties and lawyers involved; for example, there is the franchisor and their lawyer, the franchisee (vendor) and their lawyer, and possibly the landlord and their lawyer.
When acting for a vendor franchisee, the lawyer’s role is to be the conduit between all parties and to coordinate all the parties in order to reach a settlement.
This requires expertise and an understanding of the process. Getting the wrong lawyer involved may well aggravate all parties and frustrate the process, which can affect the relationship between the franchisor and incoming franchisee before it begins.
The irony is that all the parties generally want the transaction to conclude but it is often one of the party’s lawyers that puts roadblocks in the way.
Using a lawyer from the list the franchisor recommends is fine provided they are independent and do not act for the franchisor.
Above all, seek advice before you enter into an agreement and seek advice before you walk out of one, so you know what the implications and risks are!
You can also seek a referral from the Law Institute or Law Society in your state, contact the FCA, or ask an existing franchisee in the system who they used.
All these options are better than taking pot luck.
Good advice costs money; bad advice may well cost you a whole lot more!
Lawyers who are not experienced franchise lawyers often focus on issues that are
really not the key issues.