Franchisee Lawyers Help Franchise Buyers Avoid Costly Mistakes

Franchisee lawyers focus attention on Item 19 in franchise disclosure documents (FDDs) which covers financial performance. While not all franchisors provide Item 19 disclosures, a growing percentage of them do, probably to help them stand out against other franchises competing for buyers. Whether or not your franchisor includes Item 19 disclosures, your franchisee attorney will demand clarity about earnings.

Becoming a Single Unit Operator

There are not as many single unit franchise owners as there used to be. The trend toward multiple unit ownership is strong, and it's not as easy to become a single unit franchise owner today. However, that doesn't mean it's impossible. Improved access to credit may benefit those who want to become single unit operators, but in reality, many franchisors prefer working with only a handful of multi-unit franchisees to dozens or hundreds of them.

Litigation and Healthcare Laws

Many franchise law cases in 2012 had to do with the distinction between "franchisees" and "employees," and your franchisee attorney should stay abreast of current case law in this area. Additionally, new franchise owners must prepare themselves for requirements of the Affordable Care Act, specifically requirements for franchises with 50 or more full-time employees. Preparing now can help things go smoother in 2014 when the law kicks into high gear.

The FTC and Franchises

The Federal Trade Commission regulates franchises at the federal level, and your franchisee lawyer should stay up to date on FTC rules and clarifications the FTC sometimes issues about their rules. Often these rule interpretations have to do with geographic territories and exclusivity that could affect your franchise significantly.

The "Accidental" Franchise

Sometimes people find themselves operating as a franchise without even realizing it. If you are using someone else's trademark for a fee, under certain state laws, you could be a franchisee unintentionally. The FTC has a list of criteria that makes a business a franchise, and if you are entering into a business that fulfills those criteria, it may be subject to both federal and state laws governing franchises. This is yet another reason to work with a franchise lawyer as soon as you make the decision to become a franchisee.