Considering A Franchise Opportunity
If you are thinking about buying a franchise business, you’ve likely been provided with a copy of a franchise disclosure document (the “FDD”). The FDD is the legal document used by franchisors to offer and sell franchise opportunities in the United States. All franchisors are required to disclose the FDD during the sales process by federal franchise, but these legal documents aren’t always easy to understand. Often, the sheer volume and breadth of information make it difficult for entrepreneurs to digest. Franchise attorneys can analyze the information and explain the implication of legal terms so buyers can conduct diligence and make informed decisions.
Understanding the FDD is essential
Receiving an FDD and understanding the contents of an FDD are two entirely different things. Understanding the disclosures found in the FDD is an essential part of the due diligence process, but this is easier said than done. The federal rules and regulations on franchising are complex, and are often supplemented by state franchise laws. Even within the practice of law, most attorneys do not understand or appreciate the intricacies of franchise law.
As a franchise law firm, we may be biased, but we believe that engaging a business attorney with specialized knowledge in franchising is an indispensable part of buying a franchise business. Engaging an attorney is a small price to pay and may pay dividends throughout the business life cycle. Opening a franchise business often costs hundreds of thousands of dollars and the franchise agreement often includes an obligation to continue operating the business for 10 years or more.
The nature of a franchise relationship and the contracts that govern the rights and obligations of the franchisee and franchisor necessitate business and legal due diligence. Simply put, retaining a franchise attorney should be part of your budget when buying a franchise business.
How Much to Retain a Franchise Attorney?
It depends. As a franchise law firm, we can tell you what we charge, but every law firm establishes their own pricing. In our experience, most franchise attorneys bill at an hourly rate of $400 to $600 an hour or handle a limited scope of work for a flat fee. For the specific task of reviewing an FDD, many franchise focused law firms provide a flat fee. Some firms charge an expediting fee or charge for consultation. We have had clients advise they obtained quotes from $1,500 to $2,500 in the past, but your mileage may vary. Our firm offers competitive flat rate pricing for FDD review.
Our Firm Charges a Flat Rate of $1,850 to Review Any FDD
We know approximately how long it takes to review an FDD and counsel our clients, and we discount our normal hourly rate for franchise prospects because we want to be the go-to business attorney from the launch of the franchise business through execution of an exit strategy. We believe in establishing mutually beneficial long term relationships in all areas of business. Our flat rate includes comprehensive review and analysis by an experienced franchise attorney, preparation of a report documenting our findings and recommendations, and unlimited consultations as the client explores the franchise opportunity. We also help clients negotiate the business and legal terms found in the franchise agreement.
How long to review an FDD?
Some franchise law firms charge an expediting fee if you want a report in a weeks time. Our goal is to deliver all reports within 3 days and we do not charge a expediting fee. Of course, time may not always permit this quick of a turnaround. Our time is limited and 100% of our review is conducted by a franchise attorney. When time matters, we deliver.
Why Choose Waldrop & Colvin?
Our law firm offers legal support to both franchise sellers (“franchisors”) and prospective franchise buyers (“franchisees”). Many franchise attorneys have experience representing either franchisors or franchisees, but our attorneys have the unique advantage of representing both franchisors and franchisee at all stages of the franchise journey on a frequent basis. This hands-on experience allows our franchise attorneys to offer unparalleled insights into the intricacies of the franchising landscape. We may not be the only franchise law firm, but our knowledge and competitive rates are tough to beat.
Legal Support After Signing a Franchise Agreement
Businesses need initial legal support and ongoing support as issues arise. We support franchise client’s by providing complimentary legal services needed to conduct business. This often includes establishing a new business entity, redlining commercial lease agreements, helping businesses buy and sell and employ talent. The cost of ongoing legal support will vary, but we an often provide our clients with a fixed-fee quote on a per-project or per-month basis. We also serve clients on an hourly rate and can often provide an estimated number of hours. We are the law department for your business.
Post by – Derek A. Colvin, Franchise Attorney at Waldrop & Colvin
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