An Experienced Franchise Investment Lawyer Who Can Conduct Your Legal Due Diligence
Investing in a franchisor or multi-unit franchisee comes with considerable financial risk and is often a large investment. With such a considerable investment at stake, it is vital to have a franchise attorney do your research before you commit. Unfortunately, many investors try to do this on their own or rely on counsel not well versed in franchise law or the franchising relationship. Working with an experienced franchise investment lawyer can protect the value of your investment, alert you to any liabilities or risks in the investment and ensure your business has the best opportunity to grow.
We assist and advise private equity, investment companies, lenders, insurers, franchisors and franchisees in their acquisitions or investments in a franchise system or multi-unit franchisees. We often work hand in hand with corporate or mergers and acquisition counsel, where we conduct the franchise-related due diligence. We analyze the health of a franchise system and uncover any potential liabilities or compliance issues. After the definitive agreements for the acquisition or investment are prepared, we will review them for franchise-related issues and suggest or directly negotiate related terms. With deep experience in the franchise industry, we provide a 360 degree due diligence review for our clients looking to acquire or invest in a franchise system or multi-unit franchisees.
Qualitative Due Diligence
Many investors focus solely on the economic aspect of the business. While this isn’t necessarily wrong, it’s important to remember you are investing in an established franchised system and brand. We help our clients by performing qualitative and quantitative due diligence to be confident your investment will be fruitful.
As part of the qualitative due diligence analysis, we focus on a multitude of factors, including the following:
- The size of the franchise system and its current growth
- Litigation history
- Operating restrictions
- Franchisee support
- Brand strength
- Training and support
- Franchise culture and relationship between franchisee and franchisor
Understanding the Economics
The quantitative aspects of your potential investment are important elements of the franchise relationship that can directly affect the success of your business. Therefore, we also focus on the economic factors of your potential investment:
- Initial investment costs
- Ongoing required costs
- Royalties and advertising fees
- Financial performance of franchisees in the system
Our goal is to help our clients make a fully informed decision before committing to the franchise. We accomplish this by probing deeply into all the information available to us, such as the following:
- The franchise disclosure document
- Franchise agreements (especially variations in agreements)
- Current and former franchisees
- Federal and state court dockets
- Publicly available information concerning your specific market
- Publicly available information concerning competing franchises
After all, our services are highly personalized; what may be acceptable for someone else may not be adequate for you. As a result, we work closely with our clients to understand their tolerance for risk and their ultimate business goals so we can help you make your best decision.
Invest In Your Success By Working With An Experienced Franchise Investment Lawyer
Whether you are investing in a franchisor or multiple units of a franchisee, it is vital to identify and manage your potential risks. At Luther Firm, PC, a California franchise investment lawyer will help you position yourself for success and avoid the pitfalls that can hinder your business before you get off the ground. Whether you are in Orange County, Los Angeles, Southern California, or beyond, to learn more about how we can handle your due diligence needs, call or email us today.