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You Can’t Fix Stupid: Why Franchisees Should Seek Legal Counsel

Below is my recent guest blog post originally published on Franchwire, a source for daily news from around the Franchise world.    

Ron White, the well-known blue-collar comedian, is widely credited with the saying, “you can’t fix stupid.”  While this has universal application, it is particularly apt to the process of buying a franchise.  Buying a franchise is complex and risky.  It involves complex legal documents, sophisticated parties, licensing, state and federal regulations, and the exchange of significant dollars for the right to run a business that somebody else created.  So, why do thousands of people decide to go through this process without seeking legal counsel?  I have my own thoughts on this, as I am sure you do as well.  That said, the focus of this article is not on the “why,” but rather on the risk of doing so.  

When your car breaks down, you go to a mechanic.  When you feel sick, you go to a doctor.  When you enter into a legal transaction, you SHOULD go to a qualified attorney.  Attorneys exist for a reason.  And it is not merely to deal with crisis.  We exist to help educate people before they part with their money; to explain the legal ramifications of buying a business; to educate you on the benefits and detriments of small business ownership; and (perhaps most importantly) to make sure that you understand what you are getting yourself into.  Far too often, an attorney’s role is minimized to that of reviewing legal documents.  We can and should do more, especially when dealing with a business purchase.  These are big transactions involving big dollars and numerous legal documents.  Don’t be penny-wise and dollar foolish. 

Most people that buy franchises fall in love with the concept and put on blinders for everything else.  Big mistake.  The franchise world is filled with bad franchises.  Franchises that fail.  Scams.  And broken promises that leave franchisees with massive debt, little cash, and often times bankrupt.  

Never forget that the franchisor has its interest, not yours, in mind.  Never forget that you are one of many franchisees that can be replaced.  Never forget that the ONLY professionals that will be objective about your purchase are attorneys, accountants, some bankers, and some insurance folks.  That’s it!  Your franchisor has its own interests in mind, not yours.  And most franchise consultants get a percentage from the sale, which automatically disqualifies them from the “objective” category.  This is why it is so important that you go to an attorney experienced in franchising matters.  After all, you don’t go to a pediatrician for heart surgery.The law is complex.

Find an attorney in the local area where you are purchasing that is experienced in franchising matters.  Doing so, will significantly reduce your risk and end up costing you less in the long run.  Not doing so, well . . .is just plain stupid.