Most entrepreneurs looking to franchise their brand or concept retain a franchise consulting company or a franchise law firm to structure the franchise system (such as royalties and fees, territories, and sales restrictions), to document the structure (in a Franchise Disclosure Document and ancillary contracts), and to register the franchise offering in the states that require registration. However, franchise consulting companies are very different from franchise law firms, and picking the wrong partner to assist you in launching your franchise system can be detrimental to the system’s future growth.
Many franchise consulting companies exist, which provide startup franchising services, including structuring, documenting, and registering. Franchise consulting companies are entities with the goal of encouraging you to franchise your brand or concept—even if doing so may not be in your best interests (see our Franchising Feasibility Test to determine whether you should or could actually franchise your brand or concept). Further, these franchise consulting companies are not law firms. Yet the franchise relationship between a franchisor and franchisee is a legal relationship, involving:
- One or more contracts between the franchisor and franchisee and a detailed Franchise Disclosure Document setting forth the rights and restrictions of the parties as mandated by state and federal law. Most franchise systems will have various contracts between the franchisor and the franchisee, including a franchise agreement, lease/sublease, and technology licensing agreements.
- Complex state and federal laws governing the preparation of the Franchise Disclosure Document, registration of franchise offerings, the offering and selling of franchises, and terminating or not renewing a franchise.
Would you hire a non-attorney to prepare your estate plan or prepare or review a lease agreement? Of course not! Similarly, only a law firm experienced in franchising can craft these contracts and interpret and maneuver through state and federal laws. It’s also important to remember that, unlike many franchise consultants, the Larkin Hoffman Franchise Team can assist you in managing your relationships and disputes with franchisees (including handling defaults and terminations), as permitted under state laws, on an on-going basis.
Finally—unlike franchise consulting companies—Larkin Hoffman is subject to state practice of law ethical rules which require us to diligently act in the best interest of our clients. Therefore, the Larkin Hoffman Franchise Team will not recommend franchising a business unless we feel that franchising may be a viable growth option in our professional opinion. And at every step of franchising, with over 40 collective years of franchise experience, the Larkin Hoffman Franchise Team brings practical business advice in structuring and operating your franchise system.