What is an FDD?

FDD stands for Financial Disclosure Document, which is a specific legal document that franchisors are required to provide to prospective franchisees under federal law. The FDD contains 23 individual items relating to the franchisor, franchisee, and the franchise itself. A prospective franchisee should make certain to fully understand all the provisions of the FDD before signing a franchise agreement.

What is a franchise agreement?

Every franchisee must sign a franchise agreement with the franchisor as part of the process of purchasing a franchise. The agreement is the legal document that controls your legal rights and obligations as a franchisee. A franchise agreement typically contains complex terminology and specialized franchise-related provisions that govern your relationship with the franchisor throughout the term of the franchise.

Do I need a lawyer to buy a franchise?

When you buy a franchise, you make a significant financial investment and undertake substantial legal obligations. The franchise agreement and the FDD detail your obligations. The documents both include specialized terminology and complex provisions unique to franchise law. Before you sign the franchise agreement, you should be certain you understand all the terms of the agreement and the FDD.

Reviewing the FDD and your franchise agreement with an experienced attorney is the best way to ensure that you fully understand your legal obligations and rights. The franchisor has a legal team looking out for their interests. You should have your own trusted advisor looking out for your interests and rights too. Franchise law attorney Ashley Nielsen assists prospective franchisees throughout the United States with review of FDDs and franchise agreements.

Are franchise agreements negotiable?

The franchisor determines which parts of a franchise agreement they are willing to negotiate with a prospective franchisee. Generally, some provisions in a franchise agreement may be negotiable, others provisions likely are not. If you would like to negotiate the terms of a franchise agreement, you should talk with a knowledgeable franchise law attorney before you approach the franchisor with requested changes.

Franchise law attorney Ashley Nielsen has extensive experience representing both franchisors and franchisees in the franchise purchase process. She understands which provisions may be negotiable and which ones are not. Ashley can assist you with negotiations and improve your chances of success by focusing on the key issues that may be negotiable.

How should I choose the legal structure for my franchise business?

Choosing the legal structure for your franchise business is one of the most important decisions you make when you buy a franchise. In some cases, you may also want to reconsider the structure as your business grows.

Whether you choose a sole proprietorship, partnership, limited liability company (LLC), or corporation as the type of entity, the choice has significant tax and liability implications. It can also affect matters relating to the management and operations on an ongoing basis. Franchise law attorney Ashley Nielsen helps you choose the right legal structure for your franchise and assists you in taking the required steps to implement formation of the business entity.

Can I sell my franchise business?

Whether you can sell an existing franchise business depends on the provisions in your franchise agreement. If the franchisor does permit transfer, the agreement likely includes conditions that apply. Even if the franchise agreement permits a transfer, selling an existing franchise is a complex process involving multiple parties and detailed legal documents. If you wish to consider selling your franchise business, Ashley Nielsen can help you with the entire process from start to finish.

Can I buy an existing franchise business?

Buying an existing franchise business is an alternative to setting up a new franchise of your own. Purchasing an existing franchise business is a complex transaction. The buyer must sign an agreement with the seller, as well as a franchise agreement with the franchisor. Just as the seller of an existing franchise should have their own legal counsel help with the transfer, the buyer should also protect their rights and fully understand their obligations by having a trusted legal advisor to assist with the purchase.

Is franchise renewal automatic?

Every franchise agreement has a specific term that applies to the arrangement, which often is 10 or 20 years. The franchise agreement between the franchisee and franchisor governs renewal of the franchise at the end of the term. Conditions usually apply to the renewal, including execution of the then-current version of the franchisor’s standard franchise agreement. When you prepare for the renewal process, assistance from a knowledgeable franchise law attorney is crucial, since renewal can significantly change your franchise obligations and rights. Ashley Nielsen assists existing franchisees with the franchise renewal process.

What if I have problems after I purchase a franchise?

After you buy a franchise, you may encounter legal issues affecting your business. Franchise law attorney Ashley Nielsen helps existing franchisees with issues that arise during business operations, such as retail and commercial leases, employment matters, and more.