The old adage, “an ounce of prevention is worth a pound of cure” applies equally in the franchise context as in ordinary life. In franchising, a franchisee and franchisor spend significant time and resources to establish and develop what both parties hope will be a successful and lucrative long-term relationship. However, while nearly all franchisors spend thousands of dollars in legal fees to ensure their interests are protected, many franchisees enter high-dollar franchise relationships without any representation. Often, a dispute that arises years after the contracts were signed could have been avoided had the franchisee retained a franchise attorney at the beginning to ensure his or her interests and understanding were properly negotiated and protected.
If you are a prospective franchisee, consider retaining a franchise attorney to help you:
- Review the FDD
- Evaluate risk factors
- Evaluate pending litigation against the franchisor
- Review the franchise agreements, promissory notes and leases, and help you negotiate any special stipulations
- Determine if you should own the franchise personally, through an entity or with partners
Most franchisors plan in advance how they will handle legal disputes with franchisees. They usually pre-select a certain court or arbitrator in the franchise agreement to handle all claims, and they have attorneys on retainer with many years experience handling franchisee issues. In unfortunate instances where a franchisee has a legitimate claim against his or her franchisor, often their claims are thrown out on procedural technicalities because, again, many franchisees fail to retain a competent franchise attorney. It is not uncommon for an unrepresented franchisee to settle and dismiss a claim they filed against their franchisor, by paying the franchisor thousands of dollars, simply because they tried to file a lawsuit on their own, but inadvertently did so in the wrong court.
If you have a dispute with your franchisor, consider retaining a franchise attorney to help you:
- Try to resolve the issue out of court
- Ensure you do not forfeit any claims by missing a critical statute of limitation deadline
- When litigation is unavoidable, put together an effective strategy to file suit against your franchisor that fits your budget
- Settle claims quickly so you can get back to doing what you do best—building your business
General Counsel, P.C. – Every Franchisee Needs a General Counsel: Led by Christopher Davis and Merritt Green, General Counsel’s Franchise Practice Group has tremendous experience in counseling franchisees and franchisors. Our attorneys have extensive experience representing both franchisors and franchisees in a wide variety of matters. Franchising is a large and growing industry. As your legal partner, our goal is to provide effective legal representation so that your business can expand and thrive.