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.?
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!