If you are about to buy a franchise business, we suggest that you obtain legal advice from a franchise lawyer. In working out the right lawyer for you, there are a number of important considerations.
The right lawyer for you
Do not engage a lawyer who has no experience in franchising. You will be paying them to learn an area of law in which they have no prior knowledge, which is not a wise move. They will be slower and less capable of protecting your interests.
How much will it cost?
There are obvious benefits to working with a team of lawyers who provide fixed-fees. It reduces the level of risk involved in obtaining legal assistance, and allows the relationship between the franchise lawyer and client to become strong. If you don’t end up with a franchise lawyer who charges you on a fixed-fee basis, make sure you are given estimates of costs before you retain them for work.
Conduct due diligence
Conduct thorough research into the franchise business that you’re interested in, and the competitors in that industry.
When you are choosing which franchise business to invest your time and money into, determine whether the franchise operates on a territory-basis. If it does, visit the potential sites and assess the level of foot traffic in that area.
Get in touch with your accountant to discuss the projected costs of the venture by looking at both the lease and the franchise agreement. This will allow you to budget accordingly and make accurate profit projections.
Check that the term of the franchise agreement, which might be 5 or 10 years, matches with the duration of the commercial lease. The last thing you want is to be without a site halfway through your franchise agreement, or without a business halfway through your lease.
Make sure you talk to current and ex-franchisees in the same network. They can give you the most valuable insight about the franchise system, including the benefits and drawbacks of the business.
The disclosure documents that the franchisor must provide you under the Franchising Code of Conduct will provide a good basis upon which to conduct your due diligence investigations.
What are your circumstances?
Consider your own family commitments and circumstances. Will this particular franchise suit your lifestyle? Can you commit the time and effort necessary to make the franchise business a success?
What is your skill set?
Another important consideration is to assess whether your skill set is compatible with the type of business you are buying. For example, if you have experience working in the hospitality industry and you are buying a coffee shop franchise, then that would be a good fit. However, if you are a mechanic who doesn’t like animals buying a dog washing franchise, maybe it is not the best choice for you! Further, consider what qualifications or training will you need before you start. Is it worth the time and money to get this training, or would it make more sense to look at other options more suited to your skill set?
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