Welcome to Law-Forums.org!   

Advertisments:




Sponsor Links:

Discount Legal Forms
Discounted Legal Texts


Franchise Disclosure Document (fdd) Review Costs And The New Ftc Rule– Mr. Franchise Weighs In

Discuss anything to do with property law - buying, selling property

Franchise Disclosure Document (fdd) Review Costs And The New Ftc Rule– Mr. Franchise Weighs In

Postby Garafeld » Thu Dec 01, 2016 5:30 pm

Mr. Franchise,

Glad to see you're a franchise attorney. I'm looking at a educational franchise. The company is fairly new to franchising with H.Q. in California. I live in Florida and would be their first franchise here. They gave me their Franchise Disclosure Document and suggested I have it reviewed by an attorney or CPA. I've contacted a couple franchise lawyers and they want retainers ranging from $1,000 to $3,000 to review and negotiate my contract. Is that a fair amount and do I really need to use an attorney? Thanks for your time - Calvin
Garafeld
 
Posts: 43
Joined: Mon Jan 13, 2014 7:37 pm

Franchise Disclosure Document (fdd) Review Costs And The New Ftc Rule– Mr. Franchise Weighs In

Postby Herrick » Sun Dec 04, 2016 6:38 pm

A couple business issues immediately concern me. You say the company is new to franchising, is based in California and wants to sell you a franchise in Florida.  Due to the geographic distance, there can be some genuine support issues. What kind of support are they going to provide, how often and how will they provide it? Perhaps they assume support can be handled remotely over the phone or by email, etc. It’s something you need to carefully consider and evaluate.

Getting to the heart of your question – do you need to use a franchise attorney and what’s a reasonable cost to review the FTC’s new Franchise Disclosure Document(FDD). My advice is you definitely need a competent franchise attorney’s input, and hopefully one with good business sense and training as well. If you need to contact a franchise attorney directly, go to:http://www.franchisefoundations.com/franchiseattorney.html

Over the years, I’ve noticed a disturbing franchise trend. Franchise companies, especially new ones, are including very unfair provisions in their contracts. I call these "boilerplate that bites," and as long as the contract sections are disclosed in the relevant tables contained in the Franchise Disclosure Document(without any elaboration on what these entail), the franchise company has fulfilled its legal disclosure obligations. But, if you don’t see these flashing red lights and sign up, you won’t be able to do anything about it later on. That’s a franchise attorney’s function – to see the flashing red lights that you don’t even notice. Don’t forget, a franchise is a long term legal and financial commitment – usually 10 to 20 years minimum. It’s suicidal to spend what often amounts to a significant amount of one’s net worth, and an even greater amount over a 10 to 20 year period without seeing what you’re jumping into. Look before you leap. There is some great information about Franchise Disclosure Documents(FDD) and the FTC's new Franchise Rule at the Franchise Foundations website at:http://www.franchisefoundations.com/fddevaluator.html

The $1,000 to $3,000 retainers you’ve quoted are probably par for the course. I’ve reviewed over 500 FDD’s(formerly called UFOC’s) over the past 28 years, and I owned and operated a franchise myself, so I know how to detect the good, the bad and the ugly in franchising. We have a unique review program called FDD Evaluator(sm). For a flat fee of $600, we review your FDD and give you a thumbs up or down on the franchise. The review also includes telling you about any red flags or unfair contractual provisions we discover. Assuming the results are positive and you decide to move forward, you can either negotiate the unfair provisions yourself – which many of our clients do successfully – or you can retain us for that specific task.

Contrary to what many franchise companies say, there is a lot of negotiation possible, especially with unfair contract provisions and even more so with new franchise companies wanting to establish a beach head in another territory. Florida is not a franchise registration state, so they won’t have to adjust any filed paperwork. When it comes to franchise agreements, experience shows you don’t get what you deserve or even what’s fair – you only get what you negotiate.

Now, if you’re dealing with a McDonalds or other blue chip franchise company, forget about franchise negotiations. But you can also forget about unfair contract provisions – they’re well beyond that.  Good luck and definitely safeguard your investment by using a competent franchise attorney.

Kevin B. Murphy, B.S., M.B.A., J.D.

Mr. Franchise

FRANCHISE FOUNDATIONShttp://www.franchisefoundations.com/franchiseattorney.htmlhttp://www.franchisefoundations.com/franchiseexpert.htmlhttp://www.franchisefoundations.com
Herrick
 
Posts: 45
Joined: Thu Feb 13, 2014 8:06 am

Franchise Disclosure Document (fdd) Review Costs And The New Ftc Rule– Mr. Franchise Weighs In

Postby Malik » Mon Dec 05, 2016 6:49 am

Mr. Franchise,

Glad to see you're a franchise attorney. I'm looking at a educational franchise. The company is fairly new to franchising with H.Q. in California. I live in Florida and would be their first franchise here. They gave me their Franchise Disclosure Document and suggested I have it reviewed by an attorney or CPA. I've contacted a couple franchise lawyers and they want retainers ranging from $1,000 to $3,000 to review and negotiate my contract. Is that a fair amount and do I really need to use an attorney? Thanks for your time - Calvin
Malik
 
Posts: 48
Joined: Wed Jan 01, 2014 4:15 am


Return to Property Law

 


  • Related topics
    Replies
    Views
    Last post
cron