The purpose of getting legal advice before signing a franchise agreement is not to negotiate or re-negotiate the terms of the franchise agreement but to ensure that you understand your rights and obligations which will be set out in the franchise agreement and any restrictions which will apply to you.
A franchise agreement is also a reflection of the franchisor – if the agreement is badly drafted and contains spelling and grammatical errors that should be a warning to any prospective franchisee. If, on the other hand, the agreement is simple to follow with understandable language and it follows the industry standards then this is more likely to support the conclusion that the franchisor has done their research, made an effort and invested in being a franchisor.
A franchise agreement will be drafted to protect the interests of the franchisor, since the franchisor has invested in developing the brand and the business system. But as with all things, it is important to ensure that you know what to expect, that you are clear on what fees you may be expected to pay, what you can expect from your franchisor and what the franchisor will expect from you. Just like when you buy a house you may want to obtain a survey or if you were looking to purchase a car, you would want to check previous MOTs or check there is no outstanding finance – not to change what you are buying but to ensure that your expectations match the reality. The same principle applies to franchising – the purpose of a franchise agreement review is to provide you with a summary of what you will be expected to do, what you can expect from the franchisor and any restrictions which may apply to you.
If you are new to franchising you may not know what is standard or not standard within the franchise industry and the purpose of obtaining legal advice is to find out exactly that – are the obligations that you are about to accept standard or are they in any way onerous or unusual.
Ultimately, you are about to invest a not insignificant amount of money and to sign up for a period of time – usually at least 5 years, so it is important to understand what is expected of you and what you can and cannot do.
For the reasons set out above, it is important that when you do obtain legal advice, you do so from a solicitor experienced in franchising.
