| SERVICES FOR START-UP FRANCHISORS I specialize in representing start-up franchisors on a nationwide basis in connection with all types of franchise legal matters and transactions, except for litigation. I regularly assist start-up franchisors with: - Understanding the basic requirements for a successful franchise system.
- Structuring the franchise system to minimize legal and business risks.
- Drafting all form agreements to be used with franchisees, including: franchise agreement, development agreement, confidentiality agreement, non-competition agreement, personal guarantee, promissory note, etc.
- Drafting the uniform franchise offering circular (UFOC) and exhibits.
- Preparing and filing registration forms required by various state agencies.
- Reviewing operations and policy manuals.
- Training franchise sales staff on legal compliance.
- Advising on state laws affecting franchise sales and relationships.
FAQS FOR START-UP FRANCHISORS How can you assist us in starting a new franchise system? There are typically 3 parts to my services for new franchisors: Phase 1. Strategy. You and I discuss your business concept and your vision for expansion. If you have already decided on franchising, we'll proceed to the next stage. If you would like my input, we can discuss: the suitability and readiness of your business for franchising; the pros and cons of franchising; alternatives to franchising; ways to set yourself apart from competing franchise systems; ways to minimize business and legal risks; ways to make your business concept more attractive to prospective franchisees; and other topics about franchising you are interested in. Phase 2. Creation. Based on the particular needs of your system, you and I will determine the types of legal documents you will need. At a minimum, you will need a form franchise agreement and a franchise offering circular. Other documents that might be needed include a development agreement, software license, promissory note, personal guaranty, confidentiality agreement, and/or addendum to your franchisees' premises lease. I will create the documents you need based on information you provide to me. Your documents will be in plain English and in an easy-to-understand format. More importantly, they will be specifically tailored to your business system, and, if you want, they can even reflect the look and feel of your business. Phase 3. Implementation. Once we have finalized the necessary legal documents and your franchise system is otherwise ready for roll out, you may begin to offer and sell franchises in non-registration states. This sales process is regulated by state and federal law. I can teach you the legal rules for selling franchises. If you want to sell franchises in any of the franchise registration states, I can register your franchise with the various states you plan to target first. I will keep you updated on the status of your state registration filings so you will know where you can legally sell franchises. What other kinds of legal services do you provide to start-up franchisors? I generally provide only franchise law services. So, I do not assist clients in forming new business entities, registering trademarks and service marks, or completing franchise manuals. However, I often prepare various types of agreements start-up franchisors may need in the normal course of business, such as: license agreements, service contracts, sales contracts, employment agreements, consulting agreements, independent contractor agreements, strategic alliance agreements, equipment leases, confidentiality agreements, non-competition agreements, etc. How long will it be before we can start selling franchises? Your input is an important part of the process of creating your franchise documents. If you respond promptly and completely to my requests for information, we can probably have your franchise documents ready in 4 to 8 weeks. At that point, you can legally begin offering and selling franchises in the non-registration states. State registration typically takes an extra 1 to 6 weeks after filing, depending on the particular state. Where do you practice law? My law practice is nationwide. Most franchisors want to be able to sell franchises in every state. A franchise lawyer who specializes in representing start-up franchisors needs to be familiar with all of the applicable state and federal laws. I have extensive experience with the franchise laws and business opportunity laws of every state in the U.S., and with U.S. federal franchise law. My office is located on the Nevada side of Lake Tahoe, but my clients are located across the U.S. Can you really work effectively with us from a distance? Yes. As a result of technology, I can provide you with superior-quality legal services regardless of where you are located. The Internet has changed the way legal services are provided. It is no longer necessary for franchise lawyers and clients to meet in person and review documents across a conference table. I provide legal services to clients in various parts of the world without leaving my office. Will you visit our business if we request? Of course. It is often helpful, but rarely necessary, for me to observe your business in order to provide you with competent legal services. In an effort to help you control your start-up costs, I do not insist on a site visit. But, I am available to travel if you want me to see your operations or to attend board meetings or other meetings in person. What are the alternatives to using your services? There are 4 general alternatives to using a franchise lawyer. 1. Do It Yourself. Some start-up franchisors use do-it-yourself resources or a competitor’s documents to create their own franchise documents. The resulting products from these efforts are usually ill-conceived, poorly drafted, and sometimes illegal or unenforceable. I am sometimes hired to fix these kinds of documents after the franchisor realizes that there are problems. If you choose this option, you should at least have the documents reviewed by an experienced franchise lawyer before you use them. 2. General Business Lawyers. Some start-up franchisors use the services of their general business lawyers. Franchise law is a specialized practice area, and most general business lawyers do not have any experience in guiding a client through the process of starting a new franchise system. If you choose this option, you should at least have the documents reviewed by an experienced franchise lawyer before you use them. 3. Big Law Firms. Some big law firms around the country have groups that specialize in franchise and distribution law. (I worked at one of these firms for nearly 14 years.) The work product from these firms is typically high in quality. But, lawyers in big law firms are usually very expensive, they are often not as available and responsive as clients want, and junior lawyers are routinely trained on the job at the client's expense. If you choose this option, make sure you know up front what your total costs will be (including charges for photocopies, faxes, long distance phone calls, etc.). 4. Franchise Development Companies and Consultants. There are some consultants and companies that provide franchise development services. These businesses often require new franchisors to buy a package deal that includes services like franchise feasibility studies, strategic franchise planning, preparing business plans, writing operations manuals, drafting legal documents, creating franchise marketing materials, and franchise lead generation. The quality of the legal documents varies. Often, the legal documents are extremely one-sided in favor of the franchisee – especially if the development company or consultant will be involved in the franchise sales process. These businesses usually do not offer ongoing legal support, and your communications with them are not covered by the attorney-client privilege. the start-up packages can be very expensive. How much do your services cost? Franchise development companies typically charge $100,000 or more for a new franchisor package (including legal documents and an operations manual). When I was with a big firm, the standard estimate for preparing a franchise offering circular and franchise agreement was $25,000 to $50,000 – but this was only an estimate. Billing was done by the hour at $250 to $300 per hour for my services, plus additional charges for telephone calls, faxes, postage, copies, secretarial overtime, etc. Because of the increased efficiency and reduced overhead of my own law practice, I am generally able to offer my services to new franchisors for a flat fee of $17,500 to $20,000 for Phase 1 and Phase 2 services described above. Master franchise systems are more. Phase 3 services are offered for a flat fee of $250 or $500 per state, depending on the state. The agreed-upon fee is usually all you will pay me. There are no additional charges for telephone calls, faxes, normal postage, secretarial overtime, etc. The only additional charges you will be responsible for paying are: travel costs (if you ask me to travel); any photocopy costs that are more than $5.00; and the costs of any expedited mail or delivery services (like priority mail, FedEx and UPS). You will also be responsible for paying state filing fees directly to the state. Are alternative payment arrangements available? In certain circumstances, I am willing to share business risks with my clients. This could mean allowing a client to defer payment for my services to the future (such as following state registration of the franchise, or following the sale of the first franchise). Or, it could mean, taking a future income stream in your franchise system (such as a portion of initial franchise fees and royalties you receive in the future) instead of all or part of my normal fees. Or, it could mean taking stock or other ownership interest in your company instead of all or part of my normal fees. I am always open to new ideas to help clients manage their legal costs. What else do we need to know about starting a franchise? See How to Start a Franchise, U.S. Franchise Law Basics, and UFOC Outline.
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