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If you are considering buying a franchise, there are many aspects you will need to consider. From finances to risk assessment to the terms of the agreement, there are many intricate details that must be considered. To ensure you are protected throughout all stages of starting and running a franchise, it’s important to retain our franchise lawyer Florida law firm. They can make sure you are not subjecting yourself to unnecessary risk.
At Luther Lanard PC, we have more than 50 years of combined franchise lawyer Florida law firm experience helping clients with their franchise needs. With a global reach, we provide quality, custom services to meet the specific needs of both you and your business. Our team has extensive knowledge of franchise law and can help you regardless of franchise type and need.
Benefits and Considerations When Considering a Franchise in Florida
Starting a business is a lot of work and takes considerable resources. Franchises allow individuals to purchase the rights to run an existing and well-established business without some of the usual startup costs. In this type of business, franchisees enjoy the best of both worlds. They have the autonomy to run and operate a business, but can benefit from existing capital and tried-and-true methods. They can also contribute to the franchise’s growth and presence across the state.
Buying into a franchise has many operational, legal, and financial ramifications that franchisees should not take lightly. Franchisees will be subject to restrictions imposed by the franchisor, which are required for maintaining consistency and compliance across the franchise as a whole. Franchisees are also expected to financially contribute to the business and support the financial growth of the company. Additionally, franchisees may have limited legal rights since the franchisor holds most of the power.
Types of Franchise Businesses You May Choose From
There are many types of franchise businesses you can choose from. Each one has its own distinct characteristics and operational style. For example, how a Chick-fil-A is operated will be very different from that of a Jiffy Lube or a Best Western, and each will have unique considerations. These factors should be taken into account when determining which one may be a good fit for you. Some common franchised industries include:
- Retail
- Full-service and quick-service restaurants
- Real estate
- Lodging
- Business services
- Personal services
- Residential and commercial services
Before moving forward with purchasing a franchise, you should first consider your interests, financial situation, your skills, and the level of support you may need. It is also important to conduct in-depth research while deciding what to pursue, as well as due diligence once you have initiated the buying process.
Do Your Due Diligence When Purchasing a Florida Franchise
It is critical to perform your due diligence when considering buying a franchise. This means that you should closely review various aspects of the business. To make sure that you do not blindly enter into a franchise agreement, the Federal Trade Commission (FTC) requires franchisors to disclose specific information about their business to prospective franchisees per the franchise rule. This information is provided in the Franchise Disclosure Document and includes these 23 items:
- Franchisor’s background
- Background of the business
- Litigation history
- Bankruptcy history
- Initial costs and fees
- Ongoing costs
- Investment expenses
- Business and operational restrictions
- Location restrictions
- E-commerce restrictions
- Rules about advertising and training activities
- Franchisee’s legal obligations
- Franchisor’s involvement
- Information about logos, service marks, and trademarks
- Information about proprietary and intellectual property
- Expectations for franchisee
- Updating, renewing, transferring, or terminating an agreement
- Relationships between franchisors and public figures
- Financial performance of the franchise
- Growth, turnover, and prior franchise data
- Financial records for the franchise
- Copy of the proposed franchise agreement
- Confirmation that the franchisee received the Financial Disclosure Document
This document should be reviewed carefully by both you and your attorney. The Franchise Disclosure Document sheds light on key details about the business that allow you to make an informed decision about whether or not to purchase the franchise in question. Your lawyer can help you determine how to proceed in light of what you learn via this document and the rest of your due diligence.
Legal Protections for Franchisees in Florida
In addition to federal oversight, Florida has several key laws that govern franchise relationships and how franchises may operate within the state. These laws are intended to protect franchisees and promote ethical practices by franchisors.
Franchisees benefit from protections under the Florida Franchise Act. This law is designed to enforce franchisor transparency and protect you financially as the franchisee. Franchisees have legal rights and protections when franchisors make fraudulent claims, violate disclosure requirements, or act in bad faith. In these situations, franchisees have the right to hold franchisors liable and recover lost expenses or investments.
Florida also implements the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). This rule provides clarity on franchisee rights when they have been affected by a franchisor’s deceptive practices. To bring a claim against a franchisor, a franchisee must be able to show that such an act was committed, provide evidence linking the franchisor’s actions to their losses, and demonstrate the extent of the damages they sustained as a result.
If you are concerned about any aspect of the franchise or your rights at any point during due diligence or after, it is essential to consult with franchise lawyers in Florida. They can provide clarity on what your options are and whether or not you have a claim.
Key Services Our Lawyers Offer Florida Franchisees
Our franchise attorneys in Florida can help franchisees whether they are buying a franchise for the first time, modifying or exiting a franchise, or need to settle a dispute with a franchisor. The franchise lawyers at Luther and Lanard, PC will safeguard your interests so your rights are not infringed upon, and so you can benefit from favorable terms or outcomes.
Below are some of the key services Luther Lanard, PC offers our clients throughout the state of Florida.
Buying and Selling a Franchise
Whether you are buying or selling a franchise in Florida, you must think strategically and make sure that all legal requirements are fulfilled. We can help you understand your options based on your financial situation or based on the terms of your franchise agreement if you are looking to sell. We also review all due diligence findings, proposed agreements, and/or existing agreements to protect your investment and future. Our team negotiates on your behalf as well, so you can be confident about moving forward.
Legal Review of the Franchise
Before purchasing a franchise, you should thoroughly understand the business’s operational model, legal and financial history, and terms of the proposed franchise agreement. A lawyer can conduct a legal review of the franchise and all the documents that must be disclosed during the due diligence period. Your lawyer will also evaluate the agreement to determine your rights to exit the franchise and the dispute resolution process. Your lawyer will help minimize your risks before and after the purchase.
Reviewing and Negotiating the Terms of Your Lease Agreement
After buying into a franchise, you will need to find a physical space and sign a lease. Luther Lanard, PC can thoroughly review the proposed lease to make sure it aligns with the terms of the franchise and determine what rights you and the landlord have. We identify areas where the contract can be negotiated and communicate on your behalf. We make sure that the lease is also fair to you, and that your rights and interests are also represented and protected within the commercial lease agreement.
Breach of Contract Dispute Resolution
Contracts are meant to protect both parties and provide clear direction on what happens when either party fails to uphold their legal responsibilities. Our team provides representation when there has been a breach of contract. We work to help both parties reach a resolution that they are satisfied with and ensure that any damages are compensated for as applicable. While franchisees often have more limited rights compared to the franchisor, franchisors must also act in good faith and can be held accountable.
Franchise Encroachment
When purchasing a franchise, you are supposed to be protected from the franchisor or other franchisees in the business encroaching on your territory. Our team can help you handle franchise encroachment issues so your investment is protected, as well as that of the franchise owner. If the franchisor is encroaching on your territory or trying to minimize it, we can help you push back and recover the losses you have sustained from lost revenue. We can also hold the franchisor accountable for bad faith practices.
Regional Concerns That Florida Franchisees Should Consider
While all parts of Florida must adhere to federal and state guidance pertaining to franchises, there may be different concerns depending on the region of the state. Franchisees should consider these factors before purchasing a franchise. They should also consider what accommodations may need to be made to compensate for these concerns so the business succeeds. While the specific areas of concern will vary by region, all franchisees should be prepared for the considerations below.
Regional Economic Factors
Local and regional economic conditions should be carefully weighed by franchisees so they have the best chance at success and their investment is protected. Different parts of the state have different levels of economic stability. For example, Central Florida, the panhandle, and Southwest Florida face more challenges than other parts of the state. Labor challenges, tourism, large corporations, military bases, and more can make it challenging for franchisees to establish and grow their business.
Cost of Real Estate in Florida
The cost of commercial real estate is an important factor when determining where to open a franchise. Some parts of the state, like South Florida, have higher real estate costs due to the presence of large cities and rapid growth. Depending on your financial situation, these markets may be harder to break into if property costs are prohibitive. It is important to thoroughly analyze real estate costs and trends, and work with a skilled lawyer and real estate broker when considering buying a franchise or space.
State of the Local Labor Market
As a franchisee, you will be responsible for hiring employees to carry out operations in your franchise. However, you will need to think strategically about the labor market before you ever settle on a location. Not all labor markets are created equal within the state, and Central Florida and Southwest Florida come with additional challenges. The state of the regional economy, housing market, and job opportunities can all influence how strong or weak the labor market is, which can have implications for your business.
Competitive and Oversaturated Markets
To prevent encroachment and ensure your business can thrive, you will need to understand the competitive landscape of the area. Some markets may be more saturated than others, making it difficult to find a suitable location. You may run into these challenges in areas of the state with higher tourism and larger cities, such as Orlando, Miami, and Tampa Bay. These areas are attractive for businesses, but are exactly what can make it harder to stand out and grow the business you have worked hard to start.
Impact of Hurricanes
As a peninsula, Florida is particularly exposed to hurricanes and tropical storms. The damage caused by these storms can affect your business, especially if you are in an area that is commonly in the path of these storms. Florida’s panhandle and southern coasts are common areas affected by hurricanes. Hurricanes may cause you to lose business or pay for costly repairs if you sustain hurricane damage. This factor should be carefully considered, especially in light of your finances and longevity goals.
Contact our Franchise Lawyer Florida Law Firm Today!
Luther Lanard, PC is committed to your success as a franchisee. Whether you need an agreement reviewed, help resolving a dispute, or another related service, we are ready and equipped to protect your interests. Our team provides sound counsel and legal guidance so you are thoroughly protected. Schedule a consultation with our team when you contact our Florida office and let us get to work for you.