Choosing the right franchise attorney is one of the most critical decisions you will make as a franchisor. The documents that your attorney crafts and the advice provided can make or break your franchise program. But how does one go about finding the right attorney?
Unfortunately, the legal profession is highly competitive. And with hundreds of thousands of franchises that have been sold in the United States in the last decade, many attorneys who are not franchise specialists can claim to have franchise experience. But often, that experience may be limited to a review of a franchise disclosure document on behalf of a franchisee or working with a franchisee on a non-franchise related issue. So while an attorney may be representing themselves as someone with franchise expertise, in fact, their experience may be far short of what you really need.
The fact is that there are over 1 million attorneys in the United States, but there are probably fewer than 2,000 attorneys with any real franchise experience. And of these 2,000 franchise attorneys, there are perhaps 200 franchise lawyers who are a good fit, for example, for a new franchisor looking to franchise their business.
So how does one make the choice?
The best way, of course, is to receive one or more referrals from franchise professionals. If you would like a referral to a qualified franchise attorney, the iFranchise Group is happy to make these referrals regardless of whether you choose to work with us or not. And since we never take referral fees from these attorneys, you can have some confidence that these referrals will be objective. To speak to one of our franchise consultants about franchise attorneys that can help you franchise your business, click here.
Should you choose to do the search yourself, the first and most important piece is the experience of the attorney. Check their website to see if “Franchise Law” is listed as a separate practice area. Then look at the lawyers in their Franchise Practice Group. Do their bios talk only about franchising, or do they list other areas of expertise such as general contract law, real estate, estate planning, etc., as a part of their practice? Do they list franchise publications? Do they list franchise specific honors (being named to the Franchise Times list of Legal Eagles, for example)? How long have they been practicing franchise law?
Once you have identified the attorneys you would like to consider, you should ask them probing questions based on what is important to you as someone who is going to franchise their business:
- Location. While this is not much of an issue (as franchise lawyers can practice anywhere), closer is nicer.
- Franchisor vs. Franchisee experience. It is important that your franchise lawyer has significant experience on the franchisor side of the ball. If a franchise attorney does the majority of their work for franchisees, they may be too pro-franchisee with their advice. And if they do all their work on the franchisee side and do not regularly draft Franchise Disclosure Documents (a question you should ask anyone you are interviewing), then they are unqualified.
- Transactional vs. Litigation focus. A “transactional attorney” will focus their practice on the preparation of your franchise legal documents. If your franchise lawyer does not have some focus on the transactional side, they will not be as efficient at preparing your documents. The advantages of working with a franchise attorney who also has a litigation practice are that they can represent you if needed and they may be more focused on preventing litigation in the drafting process. The disadvantages, of course, are that they are not as specialized and, during a trial, they may be almost impossible to reach (if one person does both). Note: The threat of litigation in franchising is often overblown. Please click on the link for our free webinar on The Litigation Myth.
- Flat fee vs. hourly. Many franchise attorneys on the transactional side will work on a flat fee basis if you want – as they have enough experience to know how much time the average start-up franchise program will take. The advantages to working with a flat fee franchise lawyer are that their fees are predictable and can often be financed over a few months. The disadvantage is you might occasionally (rarely, in our experience) pay more than you would hourly. Most transactional attorneys are looking for a long term relationship, so they will often discount their fees to establish your relationship. Note: Many franchise attorneys will discount their fees substantially if you are working with an established franchise consulting firm, as this will make their jobs much easier.
- What’s Included? If you are working with a flat fee attorney, make sure you know what is included in their flat fee and what is not. Otherwise, you are likely to compare apples to oranges. Does their fee include any franchise registrations? If so, how many? If not, what are their costs per registration? Does their fee include a review of your Operations Manual? Does it include a review of your franchise marketing material? If they are an hourly billing attorney, will they bill you for their travel time? Who will be doing the work, what is their experience, and what are their billing rates?
- Industry-specific knowledge. In a few industries (non-regulated service businesses), prior industry segment experience is not hugely important. But in many industries (ranging from foodservice to senior care to home improvement to education), a knowledge of the additional regulations that impact the business can be very helpful. And in some industries that have complex regulatory concerns (medical franchising, healthcare franchising, dental franchising, etc.), this industry specific knowledge is vital. In areas like health care franchising, for example, our franchise consultants have identified less than a dozen franchise attorneys with deep industry expertise.
- Firm size. A larger firm can bring more resources to the table and can do more for you. Your franchise lawyer can bring in a specialist who can help with other transactions, trademark work, real estate, and other needs. Larger firms may have more in the way of “connections” within the franchise community and will often have internal education programs that allows them to “cross-pollinate” when new ideas or issues arise. But larger firms may delegate some of the drafting work to associates (not partners). While this allows them to work at a reduced fee (lower billing rates for associates), it may make them less familiar with your documents when questions arise. So the specific franchise attorney who will draft your Franchise Disclosure Document will be an issue. A smaller firm or sole practitioner will provide you with more (or exclusive) access to a “partner level” attorney. The downside is that there is no “back-up” if the partner is run over by a bus, has a health issue, or even goes on vacation. And accessibility may be more of an issue. Mid-sized firms can sometimes provide a balance between the two.
- Price. There is often a correlation between firm size and price. Larger firms generally charge more as they have larger overheads to support and often pay their attorneys more. Generally speaking, we do not recommend that price is your top or sole criteria for attorney selection, as the small difference in price can often make a big difference in quality (and results!).
- Accessibility. All attorneys, in our experience, will tout their accessibility. It is not always true, of course. Perhaps more important than “accessibility” is communication style. Some franchise attorneys prefer email and some prefer phone contact. If you have a preference, you should probably inquire on this issue.
- Personality. In most instances, you will be working with your franchise attorney for years. So if you do not like them, don’t hire them.
In our experience, it is generally best to wait on the decision to hire a franchise attorney until after you have worked with a franchise consultant to determine the feasibility of a particular franchise. In that way, you can be sure that you are not paying for franchise legal advice for a franchise program that ultimately will not work. And since the best franchise consultants will provide you with an initial understanding of the “franchisability” of a concept at no charge, this is often the most economical alternative.
Either way, the iFranchise Group is happy to help. To speak to one of our franchise consultants about the feasibility of your franchise program or for a no obligation referral to a qualified franchise attorney who can help you franchise your business, click here.