Basic Tips To Avoid Legal Problems
If you’re considering starting a franchise, or already have one set up, it is important to gain the knowledge of franchise law. You must know the facts and where to go for help before signing your name on the dotted line.
Use franchise lawyers and franchise consultants who have a broad depth of experience in franchising
Franchising can be a hugely successful if you stay with professionals and avoid working with the franchise-packaging firms. They appear to offer you the whole package, which could include preparing your legal agreements, but this can often lead to prblems in the long-term.
Don't believe everything a franchise broker or franchise consultant tells you
Franchise consultants can sometime be called franchise brokers or franchise advisors. Ask your consultant if they receive any commission from a franchisor for introducing you. If so, consider the fact that their best interest is with the franchisor not with you.
You must always have an exit
Operating as a sole trader with the franchisor may not be a viable option, if you’re tied in by a post-termination non-competition agreement.
Never assume you have any rights
If you haven’t been told by the franchisor of any rights, then you most likely don't have any.
Be carful of what's expected of you
The guaranty you may sign could make you personally liable not only for past owed management fees, but also for any damages resulting from an early termination of the Franchise Agreement.