/Why you Should Seek Legal Advice When You Are Buying A Franchise
Why You Should Seek Legal Advice When You Are Buying A Franchise

Why you Should Seek Legal Advice When You Are Buying A Franchise

Purchasing a franchise may seem like the quickest way to business success. After all, you don’t have to build a brand or do any marketing. In some cases, you don’t even need start-up costs, because they’re part of your franchise package. It can be helpful to look into a franchise you’re already familiar with, but it’s not a strict requirement, because many franchise deals include comprehensive training.


As a seller, franchise agreements are pretty straight forward. They’re a largely hands-off method to expand your reach into other markets, and its low cost, low effort. For your buyer things are a little trickier, so they need to engage the right franchise legal advice. Fortunately, there are law firms that specialize in Australian franchise deals.


Why You Should Seek Franchise Legal Advice When You Are Buying A Franchise


To Fit Your Business Needs

Buyers have various reasons for investing in a franchise. Obviously, the first is to make massive profits, but there could be other motivations as well. Maybe they want to set up a family business, so they want to get their friends and relatives involved. This may require study of the fine print, because some franchisors want to install their own management.


Also, if you – the buyer – hope to give your employees autonomy, you need someone to demystify the legalese that explains just how much authority you have. Can you decide what time to open or close, and where your location will be? Do you dictate the amount of stocks you can access, and can you develop campaigns, product lines, services, and packages that play to your team strengths? Lawyers can read the jargon and translate it to English.


To Be Sure The Type of Franchise You’re Getting Involved In

Not all franchise agreements are equal. The most common kind is the business model, where you get everything you need to successfully represent the brand. It includes branded transportation, in-store signage, advertising collateral, brand training, and complete guidance. You also have easy access to the brand head office, and might be assigned a franchise consultant as your go-to guy or girl.


This is what many buyers assume they’re getting, but it’s not always the case. Sometimes, the language in contracts and leases implies something different. For example, from a legal stand-point – and a financial one, a franchise agency had different responsibilities from an authorised dealer or a distributor. And those seemingly benign differences in language could be the difference between doubling your profits and being sued by an irate customer.


To Find Out What Resources You Can Access

In the same way, your agreement spells out the type of help you can get from your franchisor, and sometimes, a single misunderstood word can completely change the face of your franchise. Some franchisors will only let you set up on property they own themselves, so there’s an added legal requirement of purchasing land in their name.


Others have detailed agreements on when, how, and why you can renew you franchise (or not). Some franchisors use a kind of ‘angel investor’ approach where they’ll give you all the funding and equipment you need, and you’ll pay back in installments. Others just want a percentage of your take, but you have to put up the up-front cash on your own.


Some franchisors have pre-arranged tax systems in place, while others leave local government dealings to you. These specifications are always clearly laid out in franchise agreements but what’s clear to a lawyer and what’s comprehensible to a layman are vastly different creatures, so find a lawyer you trust and let the deal with the devilish legal details.


To Resolve Any Disagreements That Arise

When you’re small business-person dealing with a big brand, you can feel outclassed and outmatched. It can be intimidating, and sometimes demoralising. That said, you have a wide range of franchisee rights, and a lot of them are in that very same document, cloaked in legal gibberish. Have a lawyer go over everything and explain it to you, so that you’re not blindsided at any point.


Lawyers become especially important in cases where you and your franchisor have a disagreement. It could be as ‘simple’ as deciding if the percentage was based on net or gross takings. Or it could be as complex as confirming whether the franchise lease covers twelve compete months or one calendar year. Either way, having a good lawyer that specialises in franchises can save you a lot of headaches, and a lot more money.

Read More:

Legal Advice When Buying A Franchise

Why you need to obtain legal advice when buying a franchise