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Small Business Digest



Before Taking the Franchise Plunge, Call a Lawyer

With millions of Americans laid off and looking for their next opportunity, the idea of buying a franchise business might be seem very attractive.  In fact, the International Franchise Association Educational Foundation forecasts that the number of franchise establishments will increase in 2010 by 2%, a net gain of nearly 18,000 business places.

David L. Cahn, Founder of Franchise & Business Law Group in Baltimore, offers these insights for would-be entrepreneurs to consider before they sign on the dotted line:

* Investigating the development and operation of a new franchised business is different from developing a new independent business.  While a franchisor can provide you with a great road map on how to run the business, and also valuable promotional support, the franchise relationship contains risks that must be explored and understood in advance.

* This investigation can be made easier by the franchise disclosure document (FDD) that franchisors are required to provide to prospective franchisees.  However, the FDD is a lengthy and somewhat complex document.

* Lawyers who have experience, both preparing those documents for franchisors and also representing franchisees, can distill the important points and make sure that the prospective franchisee understands all risks and also how to properly complete his or her investigation of the opportunity.   

* Lawyers who have represented clients who have “lost everything” from opening and operating a franchised business have particularly strong insight into the questions that prospective franchisees should be asking their potential franchisor.

* Business owners are often unaware of how much a franchise lawyer can negotiate on their behalf before signing of a franchise agreement, including protections that might help avoid financial disaster if the franchised business fails.

For more information about franchise businesses and legal considerations, visit


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