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Legal Tips for First Time Franchisees

The following are tips for would-be franchisee.

1. Consult a Franchise lawyer before beginning a franchising business. The cost of obtaining legal advice is relatively small compared to the total investment for a franchise. Moreover, the cost of sound legal advice at the outset is invariably less than the cost of later legal representation to solve problems that could have been avoided in the first place.

A lawyer will also be knowledgeable with other legal requirements that come with running a franchised business (e.g. taxation, labor, liability issues).

2. Upon a presentation to you of the written franchise agreement by a potential franchisor, do not immediately believe him if he declares that this contract is inflexible. Instead, consult a franchise lawyer and seek to negotiate.

While franchisors may declare that their prepared agreements are fixed, franchisee lawyers are capable of introducing and proposing terms which may better work out for both the potential franchisor and the prospective franchisee. Moreover, since a franchise agreement is usually complicated, replete with legal terms and long, prospective franchisee will need a franchisee lawyer to fully understand it.

3. Take accurate notes of all your commnications with the prospective franchisor, especially al his statements , promises and representations. Make sure that they are all stipulated in the written franchise agreement. Although the agreement between the franchisor and the franchisee may be established to include the franchisor’s oral statements, promises and representations, it is still best to incorporate all these in the written franchise agreement.

Proper documentation of all communications relevant to the franchising engagement will always be handy in case any problem concerning the franchise contract arises.

4. Always be honest, reasonable, and fair in all of your transactions with the franchisor. Honest dealings will always be protected by the law. If a problem arises between you and your franchisor, make sure to remain civil, avoid rudeness and disrespect. Instead, let your franchisee lawyer handle it for you.

About the author: Atty. Philip V. de Jesus is one of the lawyers of De Jesus, Manimtin and Associates, a Makati based firm rich in franchising experience. Email: Atty. de Jesus at [email protected]

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