DEdwards started this topic @ 11:35 on 09/06/2009
I am close to finalising a purchase of a franchise and I am not sure whether is it worth paying a solicitor to check the franchise agreement.
I met a solicitor for a FREE and brief consultation about this and they said they would read the agreement and highlight areas they believe would be worth drawing to my attention - However they did state if they have drawn up agreements for their franchisors they never change them. Most of the research I have done all seems to say - "get the agreement checked but most are non-negotiable" Therefore why pay between £200 - £300 to a solicitor to point out the pitfalls(which I think I can see myself in the agreement) in the knowledge that the franchisor [under guidance from their own solicitor] is going to be very reluctant to amend it? common sense tells me to save my money or am I being incredibly naieve and foolish?
RE: Solicitor's checking franchise agreeement - is it worth it?
RIPPEDOFF | 28/06/2009 10:48 PM
OH MY GOD DO NOT EVEN THINK ABOUT signing any agreement without advice. I got legal advice and I am still in a total mess - the thing is franchise agreements are almost 99.9% in favour of the franchisor and just be 100% what you are signing to. If you terminate early what happens? You are ususally personally liable depsite havign a Ltd company and they can sue you for loss of earnings. Can you REALLY know if you can stick at this for whatever the term is? what if the figures have been mispresetned to you and you still have to stick at it losing money all the time?
They are usually non- negotiable - ask yourself why even if it means re-considering signing up at all!
Please get advice and listen to it. Don't just sign. THINK about what a franchise review lawyer tells you and what it could mean if things do not go postively, If I can save one person from this terrible nightmare I (and about 20 others) am going through then this message is worth it.
RE: Solicitor's checking franchise agreeement - is it worth it?
emplaw | 04/07/2009 10:56 AM
There is a wider benefit in getting an experienced lawyer involved in the review of the agreement. We offer a report service which provides other due diligence on those running the franchise as well as the implied terms that may not jump off the page at you.
If you intend to go forward into the franchise without any advice because you are 100% sold on the idea and nothing will stop your decision then, of course, you will waste your money! That mindset is very common in late stage franchisees and to be honest even very early stage ones!
We have advised at a numerous franchise events and the moment you talk about personal risk, marketing information on the franchise being just that- some switch off as they are sold completely on the idea and no amount of suggesting caution will make a difference.
Often we see late stage franchisees being placed under pressure by the franchisor and being told they will lose a discount the longer they leave it. Very few franchises are instant money makers and so time is always on your side in making your decision.
Good franchises should negotiate reasonably on terms, if they will not then this tells you a lot about the franchise and the stone wall you meet in negotiations will become a lot harder if there is a problem.
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