Franchising or Chain?
Very interesting article over at Franchise- Chat, Mark Siebert's piece called "Should You Sell Franchises or Build a Chain?"
One of the franchising myths Siebert seeks to dispel it that franchising involves more legal risk than other methods of expansion. Read it, however, from the point of view of the prospective franchisee.
"The fact of the matter is that franchising need not be any more litigious than any other endeavor and, in fact, may be considerably less so.Let’s start with the disclaimer. America is a litigious society as a whole, with more lawyers and more lawsuits per capita than any other country on earth. Moreover, in America, anyone can sue anyone else for seemingly anything—including the coffee spilled on one’s lap—so there is no absolute proof against litigation.
That said, it is important to understand a few reasons why franchising is actually less prone to litigation.
First of all, the typical franchise contract is a very one-sided document. And, if written by an attorney who specializes in franchise law, it is likely to afford you a great deal of protection.
Over the years, the litigation centering on franchising seems to have come in waves. Some years ago, there were a number of cases involving the proper use of advertising funds.
As decisions were reached and case law established, we saw fewer and fewer such lawsuits. Later, we saw several lawsuits on the issue of territorial encroachment. And again, as decisions were reached and case law established, fewer such lawsuits occurred.
Why have these wavers subsided? Because the lawyers who specialize in franchising have followed these cases closely and have learned how to write clauses in their contracts that allow franchisors to avoid such litigation.
The fact is, the franchise agreements that are written today afford you [the franchisor]even more protection than those written a decade ago—as long as the right attorney is drafting the agreement."
What does this tell you, the prospective franchisee?
Well Siebert is telling you that most franchise systems have tried to nail down all their potential downside via contract.
You, the newbie you are, on the other hand are simply on the wrong end of the contract.
Still think that "being in business for yourself, but not by yourself is a good idea"?
