Important
Questions to ask a Franchising
Firm
or Franchise Consultant
It
is very important, when evaluating a
franchise attorney and consultant, to
ask a few
important questions. Not all consultants
and so-called “experts”
are really that, and if you ask the
following questions in addition to asking
for a list of references, you will eliminate
a large percentage of those you research.
When considering the option of franchising
your business, you must be very careful
about who you hire to aid you in this
process. This choice is KEY to your
success!
1)
Define “Franchise Expert”:
So many people will call themselves
experts on this topic, simply because
they have spent time in the field,
or researching parts of it. But a true
expert is someone who can qualify based
on satisfying the following questions:
a) Have they been called to testify
in court as a franchise expert. 2)
How many written articles, books, etc.
have they written on the topic? 3)
Do they have teaching experience? 4)
In what way have they been involved
in the franchise industry, and to what
extent?
2) Determine their experience in the
Franchise Industry. Find out how long
they have worked exclusively in the
franchise sector. Ask about their experience
working with both the franchisee and
the franchisor. Has this person had
any experience working as a franchisee?
Have they opened and run their own
franchise? Having someone in your corner
that understands through experience,
the challenges you will face, and some
pitfalls to avoid, will be an excellent
asset to you as you begin your own
journey.
3) Ask about the training you will
receive, ongoing support, and control
systems in place. Be sure you research
this area thoroughly, since this can
be the foundation for sure failure
or sure success! Be sure to ask if
the firm will help you review and update
legal documentation, and paperwork
related to operational systems. And
finally, be sure to ask whether they
will be offering support during the
marketing and start-up phases. Most
of the risk involved in buying a franchise,
happens in the marketing phase, so
you will want to be sure this area
is well-documented for future reference,
should the need arise.
4) If you are reviewing a law practice,
be sure to ask the following questions:
Is this firm devoted completely to
franchise-related law? How many FOC’s
(Franchise Offering Circulars) have
they drafted and /or reviewed? Are
they familiar and experienced with
filing franchise registrations and
working with the 14+ franchise registration
states? Is all legal work done by the
firm, or are you required to hire your
own attorney. IF you are required to
hire your own attorney to review the
documents and etc. drawn-up by the
firm, this is cause for concern!
5) Have they taught franchising courses
at either a university, or undergrad
level? Ask for references from these
institutions.
6) Have they taught these or similar
courses to lawyers or those in the
legal profession? If so, ask for a
reference for this as well.
7) Does the firm have both a legal
and business savvy staff? What you
are trying to avoid with this inquiry,
is having an overly tight legal contract,
that does not consider good business
sense. The adverse is also not wise.
If your operations manual says one
thing, but your contract says another,
you will be facing heavy litigation
fees and issues in the long-run. It’s
best to be sure the firm you are working
with, will offer you the benefit of
a balance of both.?
8) What Are the Options for paying
the firms fees. Do they offer both
an hourly, and a flat-rate fee payment?
While it may seem most cost-effective
upon first look, to go with an hourly
rate, this can be deceiving, since
during your start-up you will be highly
budgeted and may run into difficulty
with unknown totals and accumulated
hours.
9) These are immediate red flags:
a) Be ware of a firm that has separate “teams” for
parts of the documentation creation.
For example: A firm that has their
business team draw up the paperwork,
and an attorney they know review it.
Also: If they have an “in-house” attorney,
but they require or recommend you have
your own attorney review and approve
each bit of work they do.
b) Firms that recommend you franchise
your business, and they haven’t
even seen it! You would be surprised
at how often this takes place. The
truth is, that some businesses don’t
operate best as a franchise, and only
by reviewing the business, would anyone
be able to know this.
c) Any firm that says it will compose
your operations manuals for you. As
the true expert in your own business,
only YOU have the insights necessary
to create a product that will produce
the results you are looking to achieve. “Cookie-cutter” manuals
are yet another law suit waiting to
happen. Don’t fall into this
trap!
d) Any outrageously high or low pricing
that will allow you to franchise your
business. An example would be any “do
it yourself” franchising kits.
When dealing with the law, it’s
never a good idea to trust a kit such
as this. Protect yourself, and spend
the necessary funds to set it up correctly
the first time. You will reap huge
dividends and lowered stress levels
long term.
e) Any firm that has ever, for any
reason at all, been sued for misrepresentation,
fraud, or violating any franchising
laws. Be SURE to ask this question!
Don’t assume that the defense
story to follow negates this fact.
Even if they won in court, there was
still an issue that a client felt was
so big they had to settle it in court.
Don’t ever trust this firm with
your business. You’d never have
heart surgery by a doctor sued for
malpractice, so don’t trust your
business and your future to someone
without a perfect track record!
