What Are Some Common Legal Issues in Franchising?
By on April 01, 2021
Franchising is an effective way to grow a business by leaps and bounds. However, certain legal issues can present obstacles along the path to success. Just as with any business venture, franchising comes with risks. These risks along with the sometimes complicated and rigid federal and state laws that govern franchisors make it vital to obtain help from an experienced franchise attorney. You can count on our team at Mulcahy LLP to provide the support and representation you need to handle any franchising legal issues you may face.
Franchisor Liability for Franchisee Actions
If a franchisee or one of the franchisee’s employees makes an error, even if the error seems unconnected to the franchise system, the franchisor may bear some risk of liability. If the franchisor incurs some of the blame for an action, an experienced franchise law and business attorney can help navigate the legal landscape and minimize damage to his or her client.
Errors in the Franchise Disclosure Document
Franchisees use the franchise disclosure document to help make the best decisions possible for the franchise. However, if there are mistakes in this document, these mistakes may result in expensive litigation. Using an experienced franchise attorney to draft the disclosure document is critical for franchisors to manage the risk of litigation and liability.
Inadequate Franchisee Support
Franchise contracts may require franchisors to provide a certain amount of support to their franchisees. If franchisees perceive they are not receiving the support they are owed under the contract, they may decide to take legal action to resolve the issue. A franchise attorney can help clarify what the legal requirements are for the franchisor to support franchisees.
Franchising Law Changes
A change in legal regulations involving franchising activities can make it difficult for new franchisors to stay in compliance. This is why a franchising law attorney is valuable for franchisors. An attorney with knowledge in and experience with franchising laws remain up-to-date on changes in the law to protect their franchisor clients from as many negative effects of these changes as possible, and/or maximize any positive effects of the changes.
Differences between Franchising Federal, State, and Local Laws
The laws that govern franchising at the local, state, and federal levels are not always consistent. If your business enlarges across state borders or international borders, you may encounter significantly different legal requirements. A lawyer experienced in franchise law can help you avoid potential difficulties if your franchising effort is expanding into new territories.
There are always risks associated with franchising systems. However, with support from a franchising attorney, you can minimize or avoid many of these problems and achieve a smoother road to franchising success.
To schedule a consultation with a franchising attorney from our team at Mulcahy LLP, call us today at 949.252.9377 or reach us through our contact form.