Franchise businesses may offer a golden opportunity to start a business. However, not every franchise is a great investment. Purchasing a franchise without good legal advice and attorney-assisted due diligence can result in expensive and unexpected delays and other problems, including litigation down the road.
Every franchisor must provide a Franchise Disclosure Document (“FDD”) to prospective franchisees. The contents of the FDD, which are governed by federal and state law, contain useful information about the franchise business and the franchisor’s track record. The franchise agreement and associated agreements define the franchisor’s and franchisee’s legal rights and obligations. The FDD provides useful information to prospective franchisees about how the franchise relationship works, the franchisor’s expectations, start-up financing needed, current and past litigation involving the franchise system, and how many franchisees have succeeded or failed at the business, among other topics.
Underhill & Underhill, P.C. has assisted potential franchise owners in evaluating the risks and benefits of a potential franchise business by reviewing the franchise documents and counseling on the franchisor’s and franchisee’s legal rights and obligations set forth in the franchise agreement. This enables business owners to make sound decisions while reaping the rewards of owning a franchise. The firm also has represented national franchise companies in their Colorado operations.
Areas of Expertise:
• Documentation review and negotiation
• Risk evaluation
• Non-financial due diligence
• Supplemental agreements and contracts
• Franchisor/franchisee relationships