WHY IS IT IMPORTANT TO HAVE A FRANCHISE AGREEMENT CHECKED BY A SPECIALIST LAWYER?
A franchise (or franchising) is a process of selling goods or services involving a franchisor creating a trademark or trade name to a company and a business structure and a franchisee paying a royalty and sometimes an upfront charge for the right to conduct business under the name and system of the franchisor. The arrangement connecting the two parties is legally the' franchise,' although the word most often applies to the individual company owned by the franchisee. The name and franchise scheme is most frequently referred to as franchising in the practice of establishing and distributing. To have this work out effectively and efficiently, it is best to have a detailed and discussed franchise agreement.
It is best to consult with an attorney concentrating on franchising in the majority of cases. Although general business lawyers will be able to give business law advice, based on their previous experience working with other franchisors and franchisees, franchise-specific lawyers will be able to provide more advanced advice. They will be well versed in the reading of the franchise agreements and will know just what to look for to ensure that you only agree to terms that will benefit you. Likewise, as they are based exclusively on franchises, franchise lawyers typically work with the same businesses over and over again. As they are familiar with the work of any particular brand and will be able to give you the inside scoop, this experience will be a huge asset for you.
TO KNOW MORE ABOUT HOW TO MAKE A FRANCHISE AGREEMENT, WATCH THIS -
WHAT ALL CAN A FRANCHISE SPECIALIST LAWYER HELP NEGOTIATE?
- Royalty payment structure: By automatic deductions from a franchisee's account, certain franchisors receive royalty fees, which may render painful financial months much more challenging. This deadline for reimbursement is sometimes negotiable.
- Right to close: Not all franchisees, if things don't go as expected, are able to close their shop. Instead, they are obligated to continue operations until the completion of the contract period or until their franchise can be sold. In certain situations, an agent can negotiate the right of a franchisee to shut down sooner if the company does not take off as expected.
- Right of first refusal: If a franchisee wishes to sell a franchise unit, it is likely for the franchisor to buy it back or encourage a new owner to purchase it and take over operations. In certain situations, the franchisee is charged with seeking a potential bidder who must then be accepted by the franchisor before the final offer. One possible pitfall is that, in this situation, a franchisor may veto a bidder who makes a high bid so that he/she can make an offer for less to buy the franchise back.
- Litigation statute of limitations: A franchisee may wish to pursue litigation to settle the matter if a conflict exists between the franchisee and the franchisor. Many franchise arrangements contain a provision for a time of consultation during which the parties involved can seek to find an amicable settlement before engaging attorneys. Although this is a fine policy in and of itself, a substantial part, if not the whole duration, of the time, contained in the statute of limitations for the case will sometimes be included for the settlement period. This suggests that the franchisee does not have much time to adequately file suit if the resolution is ineffective, or may run out of time to do so. It is necessary to ensure that there is no issue with the statute of limitations and resolution provisions.
- Non-compete clause: Are you considering starting a franchise somewhere down the road or introducing another brand? Would you want the right to remain with another franchise in the same business if you plan to close or sell yours? Terms of a non-compete cannot authorise you to do so. Ensuring that the words are not overly restrictive is important.
- Franchise territories: The majority of franchise schemes sell the exclusive territory to franchisees. This can be defined as a certain distance from, for example, a certain city or county or some other delineation of your business address. Your franchise attorney will attempt to negotiate agreements that ensure your area is as broad and inclusive of population centres as possible and ensure that you are willing to retain as many consumers as possible to increase benefit.
LEGAL ISSUES OF FRANCHISING IN INDIA AND HOW TO OVERCOME THEM, WATCH THIS VIDEO -
NOW, IT IS IMPORTANT FOR THE PARTIES TO HIRE A SPECIALITY LAWYER BECAUSE:
- Attorneys specialised in franchising have taken the time to explore both the nuances in franchising and franchise regulation. Any franchise lawyers have not set out to become franchise professionals today. In law school, they weren't even introduced to franchising. Some of them probably started off as corporate lawyers, as a matter of fact.
- All the time, franchise lawyers read and write franchise agreements, which is why seasoned franchise lawyers know what to look for in a franchise contract. They know what to hone in on, precisely. Moreover, franchise lawyers keep up on all the new franchise rules.
- When you have made your decision, the value of hiring a franchise solicitor extends way beyond your comprehension of the paperwork you would be asked to sign. It is important to employ a franchise attorney because of their real job, when it comes to it, is to defend you. In franchising, one thing for them is to clarify the legal papers. To advise you is quite another one. A successful franchise attorney will give his or her view on the proposed new venture's viability.
Hence, having a specialist lawyer follow up on the orders is extremely essential and can be fruitful at every step to avoid any legal consequences.
BY - ADITI GOEL