(914) 265-4100. jl@lusthauslawpc.com

Franchise Matters

Buying a franchise? History matters. And in this instance, history means references. So check them out. Really. Checking references -- contacting others currently in your franchisor's stable, or who have left the franchise system for one reason or another is a key piece to avoiding post-purchase, buyer's remorse. This is the best opportunity you'll be offered to "look before you leap" -- to speak to other franchisees (current and former) about their experiences in the trenches.

Neither federal nor state franchise laws prohibit franchisors from negotiating franchise agreements with franchisees. So, when the franchisor's salesperson says it is against the law to negotiate, they are...not telling the truth. Franchisors can always negotiate their franchise agreements and many do. But whether or not your franchisor will negotiate and to what extent, depends on many factors.

Sellers typically decide they want to sell. Sometimes they hire a broker as an intermediary. Sometimes they don't. But ultimately, for every seller, a buyer is found. That buyer investigates the opportunity proposed, makes an offer, and then the parties retain counsel to draft and negotiate an agreement. Buyers move forward to conduct certain due diligence and, assuming all goes well, the parties close on the transaction.

Looking to expand your business? What's the best strategy? License your trademark? Or franchise the entire business process? How do you distinguish between these two options?
The first step to making an informed decision about whether to grow your business by licensing or franchising is to understand the difference between the two legal structures.

If you have a successful business that can be duplicated and you want to expand your geographic reach, you will want to consider franchising. Generally, franchising is a method whereby the franchisor gives franchisees a license to use its brand, i.e. trademarks, and systems for operating the business in return for the payment of a fee. When thinking of franchise systems, most consumers think “burgers and fries.” 

Lusthaus Law P.C. • 600 Mamaroneck Avenue • Suite 400 • Harrison, NY 10528
 jl@lusthauslawpc.com • Phone: 914-265-4100