Buying Franchise Business | 5 Legal Tips You Must Consider
Just like any other business purchase, there are several legal aspects involved, when buying franchise business. The most important one is the Franchise Agreement, normally called Franchise Disclosure Document. Some countries have mandatory disclosure laws to provide required informations to be provided by the franchisor to the party seeking franchise. Unfortunately in many countries disclosure of specific information is not mandatory like India.
However it is advisable an individual looking to buy a franchise must properly research the information provided by the franchisor and seek expert legal opinion from an attorney before signing the contract. I have compiled 5 key legal aspects an individual must consider before signing an agreement.
Buying Franchise Business- Legal Aspects
1.Trademarks – Check trademarks, trade names, logos and commercial symbols registered with the State Patent and Trademark Office.
2. Patents, Copyrights and Proprietary Information – Patents and trademarks are very important facors in buying a franchise because you are supposed to buy an authentic brand to work with.Find proper information the patents and copyrights owned by the franchisor.
3. Restrictions on Goods Sold – Check whether the franchisor imposes limits and restrictions on what the franchisee may or may not sell as a franchisee.
4. Renewal, Termination, Transfer and Dispute Resolution – Go through the dispute resolution clause that has been mentioned in the agreement. Taking an expert legal opinion is my advice when you go through these clauses mentioned in the agreement provided.
5. Contracts – This is the engine of Franchise Agreement. This is the section wherein the franchisor sets the terms and conditions of the standard operating procedure of the business relationship. My advice take an expert legal opinion in analyzing the relationship mechanism.
Finally just forgot to mention , check if there is any any history of criminal, civil and/or administrative litigation involving the franchise business and/or any of the officers, owners, directors or executives of the franchise company.