It is not left to the amateurs to build the legal documents required to franchise. So you’re going to want to hire a franchise-specific solicitor. Yet make sure that you first locate your consultant. The reason is simple: your consultant will not only tell you how to franchise if they are successful but will also tell you if franchising is the right strategy for you to expand. Before settling on this strategy, hiring a franchise attorney is a waste of time and money. In fact, finalizing your business decisions before consulting will help make the time of your lawyer more effective — thereby reducing your legal costs.
Through working with an established franchise law firm from the start, you: prevent conflicts of interest, enjoy attorney-client privilege, avoid paying for legal documents twice (once produced and once checked by outside legal counsel), can use an attorney’s office for legal proceedings (such as franchise closures, transfers, agreements, etc.), know the firm that built your company.
When you decide, make sure that the particular lawyer with whom you deal (not the firm) has the level of experience you need to guarantee that your documents are bulletproof. So while an attorney may portray himself as having franchise expertise, their experience may fall far short of what you need.
So how are you choosing? The best way is for franchise practitioners to seek one or more referrals. The first and most crucial factor if you decide to handle the search yourself is experience. Check the website of the attorney to see if a separate practice area is being listed as “franchise law.” Then look at the lawyers in the practice group of their franchise. Ask them to answer questions based on what is important to you as a prospective franchisor once you’ve identified the lawyers you’d like to consider. Below are a few areas that you have to admit:
- Franchisor vs. experience with the franchisee. Your franchise lawyer wants the franchisor side of the equation to have expertise. If a franchise attorney does most of their franchisee work, with their guidance, they may be too pro-franchisee. Therefore, if they do all their research on the franchisee side and do not draft FDDs on a regular basis (a question you can ask someone you are interviewing), they are unqualified.
- Focus on transactional versus litigation. A transactional solicitor should concentrate on writing legal documents for your franchise. If your franchise lawyer is not focused on the transactional side, they are not going to be as efficient in preparing your documents. The advances in dealing with a franchise attorney who also has a legal experience are that they can defend you in a case if necessary, and they can focus more on avoiding litigation in the drafting process. Of course, the drawbacks are that they are not as trained, and they may be nearly impossible to reach during a trial (if one person does both).
- Flat fee relative to an hourly fee. Because FDDs are relatively predictable, many transactional franchise lawyers will operate on a flat fee basis as they have ample experience to know how long the average franchise startup plan will take. Working with a flat-fee franchise lawyer has the benefits that their payments are stable and can often get paid over a few months. The downside is that you may sometimes pay more than you would if you were paying an hourly rate (rarely in our experience). Many transactional lawyers are looking for a long-term relationship, so to create the partnership, they will often reduce their initial fees.
- What’s in it? When you deal with a flat-fee solicitor, make sure you know it is being included and what is not included in the flat fee. Otherwise, you’ll just be comparing apples to oranges. Does the price include any registration of the franchise? If so, how many are there? If not, what are the processing costs? Does the cost include reading your franchise procedures manual or marketing material for your franchise?
- Clear awareness of the business. In a few industries (non-regulated ser-vice enterprises), experience in the previous industry category is not very relevant. But a knowledge of the additional regulations that affect the company can be very beneficial in many sectors (from food service to senior care to home improvement to education). And this industry-specific knowledge is vital in some industries that have complex regulatory issues (medical franchise, health care franchise, dental franchise, etc.).
- Company scale. A larger company can provide you with more resources and can do more outside the franchise domain for you. In the franchise culture, larger firms may have more ties and will often have structured training programs that allow them to “cross-pollinate” as new ideas or issues arise. Further (or exclusive) access to a partner-level solicitor will be offered by a smaller firm or sole practitioner. The downside is that if the partner has a health problem or goes on vacation, there is no backup.
- Throughout our experience, both lawyers vary their usability. It isn’t always real. Communication style may be more relevant than usability. Many lawyers in the franchise prefer email, and some prefer contact by phone. You should inquire if you have a choice.
- Place or location. This is not a concern, as transactional lawyers can practice anywhere. Many lawyers at their offices have occasional training activities, giving them an opportunity to network and learn. Closer is more excellent, but in your ultimate decision, it is mostly irrelevant.
Would-be franchisees like you need to know what franchise lawyers are doing, the educational qualification they need, the associations they are entering, and the characteristics of excellent lawyers. That way, if you need to recruit one, you have the details you need. Franchise lawyers are required to maintain a balance of interests between franchisors and franchisees so that each side can operate and thrive with a peaceful mind.