LEGAL EASE

Why a lawyer could be your best friend in franchising

BRUCE MCFARLANE

BlueRock Law

Buying a franchise should be exciting but try not to commit emotionally until you have sought the advice of an experienced franchise lawyer.

It’s easy to get caught up in the romance of being your own boss and by now you will have completed some serious due diligence; investigating a number of franchising options and perhaps even starting to form a relationship with a franchisor. This is a big financial commitment so don’t rush in. Take the time to engage a professional and rely on your franchise lawyer to provide you with guidance and advice.

YOUR LAWYER IS INDEPENDENT

It’s quite possible that you have already fallen in love with a franchise system and we all know that when we are in love we tend to overlook weaknesses. A franchise lawyer will cast a neutral eye over this business venture and won’t be afraid to ask the hard questions, like “What will happen if this relationship doesn’t go to plan?”

When we are entering a serious financial commitment, we need someone who is prepared to format the worst-case scenarios and offer us a reality check. A lawyer will provide you with a detached review of the system and will not be concerned about offering unemotional, realistic advice.

YOUR LAWYER HAS YOUR BACK

When you are entering into a serious contractual obligation it’s good to know you have an expert on your side. A franchising lawyer will be able to advise you on what is standard and what is negotiable. It’s their job to determine whether the terms of your contract are reasonable, and they will look for opportunities to negotiate so you get the best possible deal.

It’s easy to feel like the playing field is tilted in favor of the franchisor, but your lawyer is there to level the power imbalance. They will answer all your questions and offer neutral advice as they have no emotional or financial attachment to the business. You possibly haven’t thought about the business structure you will use but it is one of the key decisions you will make when setting up your franchise. A franchise lawyer will work directly with your accountant to provide you with advice that is tailored to your specific needs.

The choice you make will be influenced by a number of key factors and each structure is governed by different rules. This decision will have a significant impact on the tax you are liable to pay and how you are able to protect your personal assets from liability claims, and all have varying set-up costs. SETTING UP THE BUSINESS ENTITY

FRANCHISE DOCUMENTS ARE LONG AND COMPLICATED

You never expected the franchising documents to resemble Tolstoy’s War and Peace.

These documents are not your average contract. They are lengthy, complex and will have significant legal and financial ramifications for the signatories.

It’s a unique area of law and an experienced lawyer will understand the specific regulatory requirements, imposed by the Franchising Code of Conduct, the terminology, standard conditions and clauses. A franchising lawyer will translate the fine print into plain English, summarise your key obligations and identify any red flags.

UNDERSTANDING RISK

Like investing in any business, there is always risk when buying into a franchise. A franchise lawyer will help you take off your rose-coloured glasses and enable you to see the reality of your commercial obligations. It would be foolish to enter into a franchise without a complex understanding of any possible pitfalls. Going into a franchise with your eyes wide open will protect you in the long-term.

Ignorance is no excuse, so once you enter into a franchise agreement, whether you understand it or not, you are committed financially and legally. Don’t just cross your fingers, hope for the best and call in the lawyers when the inevitable trouble arises.

Engage a legal franchising expert now and invest in your future.

Bruce McFarlane is managing director of BlueRock Law, a practice specialising in mergers and acquisitions and franchising.