When It Pays to Be Wary; EXPERTS WARN IT'S BEST TO GET LEGAL HELP BEFORE BUYING A FRANCHISE
Byline: LINDA WHITNEY
BEFORE you buy a franchise, take legal advice.' That's what the franchising experts say. But is it necessary, or is it just another way to make solicitors richer?
Certainly, you'll incur legal fees, but consulting a lawyer could also prevent you from making the most costly mistake of your life.
Taking out a franchise involves signing a contract that can be very difficult to get out of.
'We talk of buying a franchise,' says Geoffrey Stur-gess, franchising expert solicitor at Sherwin Oliver in Portsmouth, 'yet franchisees are not consumers in the eyes of the law but equal parties to a business contract.
'Our consumer protection culture lulls people into believing that if something doesn't work, they can take
it back for a refund. That is emphatically not the case with franchise agreements.' So it is vital to ensure any contract is fair before you sign up. But if you look at several franchises and take each contract to a solicitor, fees could soon mount, so it pays to research the contracts yourself first. Sources include: * The British Franchise Association's Franchisee Guide is an independent legal guide to contracts, explaining what they should include, typical obligations and conditions.
* The Franchise World Directory 1998 includes a similar outline by BFA legal consultant Martin Mendel-sohn and covers the points to beware. It contains a sample franchise agreement and the BFA Code of Ethical Conduct, which covers the contents of the agreement.
The Ethics of Franchising, published by the BFA, lists items in franchise contracts which the BFA considers unethical.
Franchisors who are BFA members or associates should give you a copy of the BFA Code of Ethical Conduct before you sign any binding documents so you can check their contract broadly complies with it.
ONCE you have selected your franchise, you still need to take your contract to a solicitor.
Choose one who knows about franchising - one who doesn't may take longer to check it (and so cost more), and may not so easily to spot potential problems.
The BFA has a list of 30 accredited solicitors who specialise in franchising.
Twelve are also members of the Franchise Information Exchange, set up by Geoffrey Sturgess, who share information about franchises, so if one is not familiar with a franchise, another of them often is. …