Why Every New Franchise Owner Needs a Lawyer

As a first-time franchise owner, you may not think about using a lawyer for the purchase and opening process. You may believe that the paperwork and buying process is fairly straightforward, or that everything you need is handled by the franchise themselves. The truth is, though a lawyer is not required, it may end up saving you from hefty legal fees later down the road. Here are a few reasons why:

Federal Clauses and Rulings

Every country has their own federal laws regarding the sale and opening of franchise businesses. These rulings and guidelines can be hundreds of pages long and contain everything you need to know about the legalities of the purchase and operating of the franchise. The problem is, that over time, these rulings can end up being brought to the legal system for review. Instead of reviews of the laws causing updated ruling books, many systems decide to simply add clauses in the next publication. These clauses may not always be made clear to you as a franchise owner or new buyer. This is due to late publishings of the clauses or other delays in making the new publications with the updated clauses available.

A franchise lawyer, however, would receive these updated clause publications and know the rulings they deal with. This means that the lawyer would be able to inform you of rulings that may mean more paperwork, different paperwork, or extra fees that must happen prior to the purchase or opening of the franchise location. This knowledge can save you time, but it can also save you from having opening dates announced and hiring employees that can't work while you are waiting to clear up the issues that you would not be aware of on your own.

Your Business Set-Up

If you have never owned a business, then one of the first things that may confuse you, and cost you more in taxes if filed incorrectly, is your business entity status. This status refers to if you are an LLC, Sole Proprietor, or a Partnership. In some cases, people tend to go with a partnership status thinking they are partnering with the franchise. This is not the case. If the franchise does not specify that you must be registered as a certain entity, a franchise lawyer can help you figure out the best option and how to file for that option. Keep in mind, certain entity options require only a tax form while others require payments and fees along with several forms.

Protection if the Business Fails

One of the key reasons that people use a franchise lawyer is to cover themselves in cases where the business fails. For example, you may have a failed franchise and find out later that many of the franchises had failed. If this is information that is kept from you, the franchise lawyer can help you possibly recoup some of the money you put into the franchise purchase.

These are just a few of the reasons that you may want to hire a franchise lawyer at the start of a franchise purchase. Keep in mind, many lawyers do offer free consultations.