The Importance of Legal Advice When Buying a Franchise

Ensuring Corporate Documents' Enforceability - What to Know

02/02/2022

Starting a new business venture is an exciting thing. However, it’s essential to approach it with diligence and care, especially when tackling legal matters. For instance, if you’re planning to purchase a franchise, make sure you cover all the legal grounds and work with commercial contract lawyers throughout the process.

Is legal advice necessary for buying a franchise? Here are the important reasons why.

1. Lawyers Can Simplify the Language

Legalese is not easy to understand, especially if you’re not a lawyer. The language used in legal agreements is not just difficult to understand but also counter-intuitive. That’s where lawyers come in—they can help you avoid entering unsafe situations.

For instance, if you don’t know what direct and derivative liability means, there’s a good chance you’ll miss out on important details that might break your contract with the franchisor.

2. Lawyers Can Help Maximize the Negotiables

Every contract is negotiable, and one of the things you need to know is the main points you can negotiate. For instance, you can negotiate the length of the contract, the nature of the business, and the royalty percentage.

However, you can’t negotiate everything, so you must know what you can and cannot negotiate.

One of the things that you need to be wary of is the non-compete clause. Non-compete clauses allow the franchisor to prevent you from opening a similar business in the exact location or market for a certain amount of time. If you’re unsure how these things work, a lawyer can guide you throughout.

3. Lawyers Can Clarify the Extent of Training and Support

If you’re buying a franchise, you should look for the level of support and training the franchisor can provide. Aside from the general training, look at the follow-up training and support they’re offering.

This way, you can know if the franchisor is serious about helping you succeed or if they’re only out to sell you the franchise with little or no real follow-up.

Aside from training and support, you also need to know if you’re allowed to sell the franchise. This is particularly important because you may already have plans of expanding your business even before you buy.

4. Lawyers Can Assist in Contract Renewal or Termination

After you sign a franchise contract, you must know what to do if you want to renew it or have it terminated. The franchise contract may have an automatic renewal clause, which means that you’re bound by the agreement as long as you want to.

So, make sure you ask your lawyer about how to terminate the contract and the possible repercussions if you don’t exercise your rights.

5. Lawyers Can Help in Setting up the Franchise

Aside from the franchise contract, you need other papers to set up your franchise, such as the articles of incorporation and tax identification number.

Lawyers can help you set these up, so you can go about your business in no time. They’re also the best people to ask if you’re unsure what tax identification number you should get.

Final Thoughts

Buying a franchise is not a decision to be taken lightly. Aside from the fees, it can get pretty expensive when you’re dealing with legal issues.

If you want to prevent yourself from getting into a legal mess, it’s best to hire commercial contract lawyers from the start. When you work with us at GLG Legal, you get contract lawyers in Brisbane who will ensure that you’re on the safe side while maximising the benefits of buying a franchise. Schedule an appointment today to discuss our services.

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