Franchising is an excellent option if you have a well-known establishment and are considering opening new locations without dealing with the challenges of setting up new ones.
In a franchise model, you allow another entity (franchisee) to use your products, business model, intellectual property, and brand‘s influence for an initial and ongoing fee. Under this arrangement, the franchisee plays the largest part in running the business while you retain some control. Before selling your first franchise licensee to a franchisee, you must ensure you follow the proper procedure; that is where a franchise developer and a franchise lawyer from Franchise.Law comes in. While a franchise developer and lawyer are important professionals you will need to work with while franchising your business, these two are different, and each plays a different role.
Franchise Developer
Franchise developers are usually individuals with years of experience in the franchising industry. The main purpose of the franchise developer is to help prepare the documents required to franchise a business, such as training manuals, operations manuals, identifying territories, and other aspects of creating a franchise.
No licensing or educational qualifications are required for someone to become a practicing franchise developer. So, the degree of professionalism can vary significantly from one developer to another. However, the best developer to work with is one with vast experience to ensure you get the best level of service.
While franchise developers can help in almost every aspect of franchising a business, they are not licensed to practice franchise law in any state. Also, each state has different laws the govern franchise-related matters.
Franchise Lawyer
A franchise lawyer is a lawyer whose practice focuses on the franchise mode of doing business. The main role of a franchise lawyer is to ensure that all the documents involved in franchising a business comply with the Federal Trade Commission’s (FTC) franchise rule.
These documents include franchise disclosure documents (FDD) and franchise agreements. Although a franchise developer can contribute to creating these documents, they cannot legally validate them. Only a licensed lawyer can handle the legal aspects of document writing and validation.
You’re not always required to engage both a franchise developer and a franchise lawyer. When collaborating with a lawyer with substantial experience in franchising, they can fulfill the responsibilities typically associated with a franchise developer. However, it’s important to note that a franchise lawyer’s role is indispensable, as a franchise developer cannot undertake the legal responsibilities that a lawyer is equipped to handle. Keep this in mind.
Both Are Important
Even though you can do without a franchise developer, they are still essential service providers. Their contribution to the process can mean spending less and having access to invaluable knowledge from their years of experience, which you may not find in a lawyer.
Some lawyers recommend hiring a franchise developer to help lessen their workload. If you are still thinking of a franchise developer, your franchise lawyer can recommend one from their network.
Because franchise developers are unregulated, it’s important not to work with one without involving a lawyer, even when they could claim to have an in-house lawyer. If you cannot substantiate their claims of having an in-house lawyer, it is best to always work with a reputable law firm.
Working with a lawyer you can trust gives you confidence that your documents and agreements are legally binding and compliant with federal laws. As a good rule of thumb, avoid franchise developers that claim an all-in-one package.
Conclusion
A franchise developer and franchise lawyer serve distinct roles in the franchising process. While a developer prepares essential documents and offers operational guidance, only a licensed franchise lawyer ensures legal compliance with FTC regulations. Though both are valuable, the lawyer’s role is indispensable for legal validation. It’s wise to involve both professionals, with the lawyer overseeing the legal aspects to ensure all documents are binding and compliant.