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At its core a franchise is a relationship between a franchisor and a franchisee. That relationship is governed by a legal document known as the franchise agreement. A franchise agreement establishes the ground rules for running a successful operation as a unit of the franchisor’s network.
One of the more difficult tasks confronting potential franchisees is navigating and understanding the Franchise Disclosure Document (FDD). The average FDD contains over 200 pages filled with complex sentences, polysyllabic words, and legal boilerplate. It is a document written by lawyers for one purpose: protecting franchisors from future liabilities to franchisees.
Franchise agreements and commercial real estate leases are complicated and contain specialized language with unique meanings. An inexperienced reader may not know the legally assumed obligations under either contract. The terms of a commercial property lease must allow the franchisor to protect its business interests and simultaneously permit the franchisee to operate profitability. Whether you are a franchisee or a franchisor, pursue the advice of an attorney experienced in franchise and real estate law before signing any agreement.
