Buying or Selling a Franchise
Investing in an existing franchise is a complex endeavor. It requires negotiations with the seller or their broker, and with the franchisor, similar to when purchasing a brand-new franchise. These issues can intensify, as the franchisor may not engage with you or provide requisite disclosures until a signed agreement is in place with the current franchisee. We will guide you through this process, helping you understand what to expect and how to get the information you are entitled to.
If you are looking to buy a pre-established franchise from a current franchisee, it’s important you understand critical factors to consider so that you secure a fair deal and fully comprehend the legal documentation involved. As seasoned franchise lawyers, at Bundy & Fichter PLLC we can assist in simplifying the process and guide you through every documentation step.
Key Considerations When Buying an Existing Franchise
To navigate the process of franchise buying, insightful guidance from competent franchise lawyers is crucial. So, what are the pivotal aspects you should pay attention to? Our franchise attorneys have distilled their years of experience to shed light on significant franchise buying considerations that every prospective franchisee must ponder before sealing the deal. Armed with this knowledge, you'll be better equipped to make an informed decision when buying an existing franchise.
Here are some crucial steps for your franchise purchase journey:
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1. Initial Steps
Upon finding a business for sale, communication typically happens with the seller or their broker. Remember, a broker will not have your best interests at heart. Don’t sign any contract with the seller or broker until you’ve consulted with an experienced attorney. The Bundy & Fichter team, experienced in franchise and small business law, is ready to assist in this process.
2. Negotiating the Deal
Your attorney can advise on negotiations about the price and terms with the seller. They’ll consider your situation, the seller’s position, and the involvement of any brokers. Following their advice will lead to an optimal deal. Don’t let the seller or their broker rush you into hasty decisions.
3. Obtain the Franchise Disclosure Document (FDD)
This should be done as early as possible. If you encounter resistance, seek help from a franchise attorney. You are legally entitled to the FDD upon request. Reviewing it early avoids potential time wastage and unwelcome surprises.
4. Consult Your Franchise Attorney
After reading the FDD, consult your franchise attorney to better understand the legal terms and conditions you’ll be operating under.
5. Understand Your Need for Professional Services
The journey to buying a business involves professional service costs such as attorney and accounting fees. However, these expenses can potentially save you from overpaying or losing your investment.
6. Due Diligence and Franchise Approval
Make your offer contingent on due diligence and franchisor approval. This process involves reviewing all relevant records and facts about the business. Involve your attorney and accountant to ensure a comprehensive analysis.
7. Close the Deal
If everything checks out, you can close the deal and start the training process as a franchisee. If not, consider it a learning experience and seek other opportunities.
The success of your franchise purchase endeavor hinges on your ability to carefully consider each step, consult professional franchise attorneys, and understand the legalities involved. Remember, the team at Bundy & Fichter PLLC is always available to guide you through this complex process, safeguarding your interests at all times.
The Benefits of Choosing an Experienced Franchise Attorney
Having a qualified team of franchise attorneys on your side provides peace of mind, knowing that all legal issues are taken care of. Here’s what our attorneys can do for you:
- Offer guidance throughout the purchase process, ensuring all documents are in order and providing advice during the due diligence phase.
- Help you understand the details of the Franchise Disclosure Document.
- Review all contracts and suggest changes that protect your interests.
- Make sure that you are legally compliant before signing any documents and closing the deal.
- Assist in negotiating terms with the franchisor or seller, and in understanding their legal ramifications.
- Assist in negotiating terms with essential third parties like landlords and understanding the terms of each deal.
With Bundy & Fichter PLLC on your side, you can rest assured that you are in capable hands. Our team is well-versed in franchise and small business law and has all the necessary skills to offer guidance every step of the way.
However, even with an experienced attorney to guide you, it’s essential that you do your due diligence before signing any documents. Be sure to get a full understanding of the franchise agreement and all legal implications that come with it. Familiarize yourself with the franchisor’s brand standards, policies, procedures, rules, and regulations so that you are fully aware of what your responsibilities will be.
Our Commitment to Your Franchise Success: Guidance and Reliability at Every Step
Buying an existing franchise may offer the benefit of an established track record. However, it may come with complexities. With the right guidance, you can transform the challenges of buying an existing franchise into a rewarding and profitable venture. It's crucial to proceed carefully and seek the counsel of experienced franchise and small business attorneys. The Bundy & Fichter PLLC team is here to help. Contact us today. We have an office in Seattle, Washington, and we’re proud to serve clients nationwide.
Buying A Franchise
Buying a franchise may be the best financial investment you ever make, but it is not something you should enter into without plenty of due diligence. You have probably read the franchisor’s website and talked extensively to the franchise salesperson. But there is much more you need to do before you make the biggest financial decision in your life.
Whether you buy from the franchisor directly or from a current franchisee, there are important things you should do to protect yourself.
If it seems too good to be true, it probably is. The franchisor is trying to sell you something, and like any good salesperson, they are probably highlighting the good parts and hiding the bad. Insist on learning everything you can — even the bad. Call Bundy & Fichter PLLC for assistance in learning all you can about your investment. Contact us here. It will cost you a lot less to get some good advice before you invest than to wait until two years later when the business fails, and you are out of money.
What Due Diligence Should You Do?
There are many things you should do to protect yourself from a bad investment. Listed below are only a few:
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Get and read the franchise disclosure document (FDD).
This document is lengthy and is broken down into 23 sections called “items”. Each item describes information about the franchise, including the nature of the business, the relationship between the parties, information about the principals of the franchisor, an estimate of your expenses, the amount of your investment, contact information for current franchisees, and the legal status of the trademark, among others.
Assemble your own team of professional advisers.
Don’t do this alone. You need a team to protect you and advise you. Integral to this team are a franchise attorney, an accountant, and other business advisers.
Do your due diligence.
That is, research, research, research. Call the 100 nearest franchisees listed in the FDD and start asking detailed, probing questions regarding the profitability of the business, whether they are satisfied with their purchase, and what the relationship is like between the franchisor and the franchisee. Don’t waste your time calling and asking “are you happy” or “would you do it again”. Insist on specifics, numbers, and details. If they decline to talk or to share detailed information, you should assume they either failed or are failing. We would be happy to suggest other appropriate due diligence activities for you.
Protect Your Investment, Call Us Today.
If you are considering buying a franchise, contact an experienced franchise lawyer at Bundy & Fichter PLLC for a free initial consultation. We represent clients throughout the United States. Contact us.