It’s only mid-march 2014 and already I have assisted clients to settle several disputes this year. Sadly in all of these disputes the trend which I observed since day one of being a franchise lawyer continues. A staggering amount of franchisees simply disregard or fail to grasp the gravity of the pre-purchase advice they receive.
There are two types of serial offenders in this department. The first and most obvious, are the potential franchisees who simply want a solicitor’s certificate because the franchisor has told them, they won’t sign the franchise agreement until the franchisee acquires the certificate. These types of victims are a danger to themselves and probably could not be saved prior to a dispute arising. The second and more heartbreaking scenario is the potential franchisee that receives good advice, fails to heed the advice (normally blinded by opportunity frenzy) and then realises the significance of the advice when it all comes to a head.
Good franchise lawyers are not fear-mongers and deal-killers. They paint a clear picture of the likely scenarios which will occur in light of the agreement between the parties. The challenge for the client is to fully consider these potential outcomes based on their personal circumstances, experience, aptitude and risk adversity, and make a well informed decision.
Franchisee clients have a tendency to rely on verbal promises and “personality assessments” when entering into a franchise agreement. Whilst, prior promises with respect to the franchise business and the character of the directors of a franchise are important indicators, in most cases only the franchise agreement can reliably be referred during a dispute as a record of what was agreed to between the parties. A franchisor provides a franchisee with a +/-50 page franchise agreement because they expect to rely on the agreement’s provisions.
Remember, Murphy was an optimist. If your adviser takes what I consider, the drastic step of telling you not to enter into a deal, at the very least get a second opinion. Avoid making emotional decisions when purchasing a franchise. Exercise good judgment and more caution than optimism. I find the most successfully franchisees I know, spent more time looking for reasons not to buy their franchise business, than reasons to buy the franchise. Regret is a pill that is often too large to swallow.