I always recommend that my clients consult with a franchise attorney before finalizing any agreements.? However, there are some major red flags that will pop up if you don?t hire the right one.? I asked my friends and colleagues, Joseph Gottlieb and Michael Rosenthal, for their thoughts.? Here is what they had to say.
You know you have hired the wrong attorney to review your franchise agreement when:
- That attorney does not spend the majority of his or her practice on franchising.? The relationship between a franchisor and franchisee is unique, and on paper, inherently one-sided.? An experienced franchise attorney understands that, in most instances, it will not serve the client?s best interest to present a ?laundry list? of requested changes for the sake of appearing knowledgeable to the client.? The role of the franchisee?s attorney is to educate the client and to make a ?business case? for revisions to the agreement that will not necessarily result in potentially system-wide changes for the franchisor.? The experienced franchise attorney will realize that a franchisor requires a high degree of standardization in its system; after all, that is one of the factors that makes franchising so appealing to a prospect.
- Your attorney is unfamiliar with the Federal Trade Commission?s Amended Franchise Rule, found at 16 CFR Section 436, or with the various state laws that apply to franchising and franchise sales.??? These may include state laws in the franchisor?s home state, which may differ from those in the franchisee?s state, but which may still afford protection to a franchisee.
- He or she cannot explain to you conceptual terms associated with many franchise systems such as what constitutes a master franchise or an area development arrangement.
- The attorney wants to negotiate with the franchisor in a confrontational manner.? You are about to enter into a long-term relationship with a franchisor, and it is not helpful to that relationship to begin with a bruising negotiation which will leave a bad taste in the franchisor?s mouth or, even worse, convince them decide that you are not the kind of team player that they want as a part of their franchise system.
- Your attorney tries to run up your bill, by trying to negotiate dozens of franchise agreement changes which the franchisor will likely reject; insisting that you come into the office (which takes longer); or joining you on all phone calls with the franchisor.? There is very rarely a need to do this in person or in office, and you should negotiate directly with the franchisor (with suggestions from your attorney).?? If a lawyer cannot explain legal issues in plain English to a business person, it is usually the lawyer?s fault (and lack of communication skills) rather than the client?s.
Source: http://lesliekuban.com/wrong-attorney/
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