From McDonalds to 7 Eleven, franchises dominate today’s business scene. For the franchisor (a.k.a. the franchise owner), the franchise organisation model offers a method of rapid expansion in market share, brand recognition and revenue. For the franchisee (a.k.a. the person participating in a franchise), the model allows for growth under a common brand and a share in the benefits of a larger group of business owners.
Indeed, franchise models are usually underpinned by complex legal rules and arrangements. Thus, whether you are a franchisor or a prospective franchisee, it is recommended that you consult a franchise lawyer. Here are five recommended questions for both sides to consider when hiring a franchise lawyer.
5 Questions to Ask When Hiring a Franchise Lawyer
1. What is your experience with franchises?
It is a no-brainer that you will want a lawyer who has experience in franchise law rather than a general practice lawyer. A good starting question is to ask if the lawyer has previously worked for any franchises. Through this, you can get a better understanding of likely legal outcomes, costs and the commitment that both you and the lawyer will undertake.
It is also important to emphasise that you seek advice in relation to franchises. This is because the lawyer may have experience working for chain businesses, but not franchises. In a chain business, one parent company owns and manages all of the business locations. Contrastingly, in a franchise, independent owners operate individual stores. Franchises operating in Australia are regulated by the Franchising Code of Conduct while chains are regulated by different industry codes. Therefore, you will want to hire a lawyer who can help you understand the Franchising Code of Conduct.
2. Do you have any experience or background knowledge in X industry?
Not only do you want a lawyer who is well-versed in franchise law, but you would also want one who understands or is familiar with the industry within which your franchise is operating. This ensures mutual understanding of industry conditions, thus saving time and energy which you may otherwise waste from explaining the ‘business’ of your franchise to an unacquainted lawyer. A lawyer with relevant background knowledge may also identify specific industry risks that could affect your franchise and thus formulate legal solutions to protect your interests accordingly.
3. How will you help me?
In general, a franchise lawyer provides advice on:
- How to enter and end a Franchise Agreement
- What documents do you need to provide
- The legal risks of particular franchising arrangements
- The rights and obligations of franchisor and franchisee
Some franchise lawyers will only do the bare minimum while others take the extra step to further protect or advance your interests. For example, if you are a franchisee, given that franchise agreements are often one-sided in favour of the franchisor, a good franchise lawyer may be one who is willing to help you modify or negotiate the agreement that better serves your interests.
Therefore, it is important that you clearly express your needs to the lawyer so that you can determine whether he or she is suitable to meet your needs.
4. What are your costs?
It is within your interests to find a franchise lawyer whose legal fees do not impact your bottom line too much. One crucial question is to ask how the lawyer will charge you for his or her legal service.
- Billable hours are when the lawyer charges for every hour spent on your matter. Some lawyers may even charge you every six minutes. Therefore, it is important that you get an idea of how much time your lawyer is expected to take. In addition to the time structure, also ask your lawyer of what type of tasks or bases upon which he or she will charge you. This ensures transparency in the lawyer’s billing method.
- Flat fee is an one-off, fixed price for the lawyer’s service. While the flat fee structure provides a definite payment figure, it may not always cover all legal costs such as filing or contract negotiations.
Therefore, it is important to ask what type of services and tasks will be covered under the
You can receive a free fixed quote from a franchise lawyer using LawPath’s lawyer marketplace.
5. Is there any conflict of interest?
Regardless of whether you are a franchisor or franchisee, this is an especially important question if you have competitors. If your lawyer is working with your main competitor, do you really want him or her knowing your business secrets? Obviously, you would not want to hire a franchise lawyer where there will be a conflict of interest.
It is important that you ask the right questions so that you hire a suitable yet cost-effective franchise lawyer who is experienced and knowledgeable in both the law and your industry. LawPath’s Lawyer Directory can connect you with franchise lawyers in your local area.
Require a specialist franchise lawyer? LawPath makes registering a business name for your new company name fast and simple. Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents, obtaining a fixed-fee quote from our lawyer marketplace or any other legal needs.