Are you about to invest in your first franchise business? You will be spending a lot of time and money in the process. Therefore you need to make sure that you understand everything about the terms of the business deal that you are going to close. It is highly recommended that you hire the services of a franchise attorney who will have experience in helping new franchisees looking to buy as well as franchisers wanting to sell. This article looks at some of the things a lawyer can help you understand.
The Franchise Disclosure Document (FDD)
The first time that you meet with the business seller, you may be offered this document. It will be a long and detailed document that will contain all the business information that you need to know, as a franchisee. The FDD will contain information regarding previous lawsuits; all parent companies and all affiliated companies will have to be declared.
The seller is required to reveal information if any company official has any interest in vendors that are suppliers for the business. He also must reveal how many businesses were bought or sold in the past few years by the company.
The information listed above is only some of the information that your FDD must contain. There are usually 23 items on the document. It also needs to be shown to the franchisee well in advance before the closing of the deal. There are federal rules regarding these stipulated time periods, in order to safeguard the interests of the purchasing party.
Your attorney will be able to review the FDD to find out if it meets all the conditions. If there are loopholes, he will be able to identify them. Once you understand the business well, you can then enter the next stage of the deal with greater confidence.
The Franchise Agreement
After you have taken a while to go through the FDD, and have made your decision to go on with the deal, you will be given a document of agreement. This contain the terms and conditions that define the business relationship between you and the franchiser. It may be slightly more in favor of the other party. If it is, then your lawyer can identify the areas where negotiations can be carried out in your best interests.
If you are buying a business, take the advice of a franchise attorney. Chicago is home to numerous legal advisors who can help you put your new business up on its foundations with the support of existing marketing and operational support systems.
Franchise attorney Chicago – Are you looking for a franchise attorney? Chicago residents recommend Franlaw, with its experienced team of legal professionals who can offer practical advice on buying and selling a business franchise.
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