Buying a franchise seems straightforward. You pay fees, follow the system, and run your business. But franchise relationships involve detailed legal requirements that affect both franchisors and franchisees. Getting proper legal guidance before signing anything can mean the difference between a profitable venture and a costly mistake.
Our friends at Volpe Law LLC discuss franchise matters with clients who wish they’d sought counsel earlier. A franchise lawyer understands the unique regulations governing franchise relationships and helps both franchisors and franchisees protect their interests throughout the business relationship.
What Makes Franchise Law Different
Franchising isn’t just another business transaction. Federal and state laws impose specific disclosure and registration requirements that don’t apply to other business models. The Federal Trade Commission’s Franchise Rule requires franchisors to provide detailed disclosure documents to prospective buyers at least 14 days before any agreement is signed.
These regulations protect buyers from fraud and deceptive practices. For franchisors, compliance isn’t optional. Violations can result in lawsuits, penalties, and damage to your franchise system.
Services For Franchise Buyers
Reviewing Franchise Disclosure Documents
The Franchise Disclosure Document (FDD) contains vital information about the franchise opportunity. This document runs 100 pages or more and includes details about fees, obligations, restrictions, and the franchisor’s litigation history. We review FDDs with buyers to identify red flags and explain what you’re actually agreeing to.
Important FDD sections we analyze include:
- Initial and ongoing fees you’ll pay
- Territory rights and exclusivity provisions
- Franchisor’s obligations and support services
- Restrictions on operations and suppliers
- Renewal and termination conditions
- Financial performance representations
Negotiating Franchise Agreements
Franchisors often claim their agreements are non-negotiable. Sometimes that’s true, but not always. We identify terms worth negotiating and advise on whether proposed changes are reasonable given market conditions and franchise system standards.
Understanding Your Rights And Obligations
Franchise agreements create long-term commitments. You need to understand what happens if you want to sell, if the franchisor fails to provide promised support, or if disputes arise. We explain these provisions in practical terms so you know what you’re committing to.
Services For Franchisors
Creating Compliant Disclosure Documents
Franchisors must prepare FDDs that meet federal and state requirements. We draft these documents to satisfy legal obligations while presenting your franchise opportunity effectively. Incomplete or inaccurate disclosures expose you to liability.
Franchise Agreement Drafting
Your franchise agreement governs the entire business relationship. We create agreements that protect your brand, maintain system standards, and define terms for fees, territory, operations, and termination. Good agreements prevent disputes and support system growth.
Multi-State Registration And Compliance
Some states require franchise registration before you can sell franchises there. These registration states have additional requirements beyond federal FTC rules. We handle state registrations and renewals to keep your franchise offering compliant across jurisdictions.
Protecting Intellectual Property
Your brand, trademarks, and proprietary systems form the core value of your franchise. We help register and protect these assets while drafting agreements that maintain quality control and prevent misuse.
Common Franchise Legal Issues
Termination Disputes
Franchise terminations often lead to litigation. Franchisors need proper grounds and procedures for termination. Franchisees need to understand their rights and options when facing termination. We handle both sides of these disputes.
Territorial Conflicts
Territory provisions define where franchisees can operate and whether franchisors can open competing locations. Disputes over territory boundaries and exclusivity rights require legal resolution.
System Changes And Updates
Franchisors periodically update systems, products, or requirements. Franchisees must comply with these changes, but updates can’t violate franchise agreement terms. We help both parties address conflicts over system modifications.
Renewal And Transfer Issues
What happens when your franchise term expires? Can you renew automatically or must you sign a new agreement? If you want to sell your franchise, what approval process applies? These situations require careful legal guidance.
When To Involve Franchise Counsel
Buyers should consult attorneys before signing any franchise documents. The 14-day review period after receiving an FDD provides time for legal review. Don’t waive this period or skip legal counsel to speed up the process.
Franchisors need legal help when developing their franchise system, expanding to new states, or dealing with franchisee disputes. Early legal involvement prevents compliance problems and builds a stronger franchise system.
Making Informed Franchise Decisions
Franchising offers business opportunities with established systems and brand recognition, but success requires understanding your legal rights and obligations. Whether you’re considering buying a franchise or developing a franchise system, experienced legal counsel helps you make informed decisions and avoid costly problems. Reach out to discuss your franchise situation and learn how we can help you move forward with confidence.