Review the Legal and Business Commitments Before You Sign
A Franchise Disclosure Document and franchise agreement can define years of financial, operational, and brand-related obligations. Sanchelima & Associates helps prospective franchisees understand the documents they are being asked to sign and helps franchisors coordinate their disclosure documents, agreements, trademark licenses, and sales process.
An effective review is not limited to summarizing the documents. It should identify provisions that require a business decision, explain material legal risks, flag inconsistencies, and help the client decide what should be clarified or negotiated.
What We Review
Depending on the engagement, our review may address:
- Initial fees, royalties, advertising charges, technology fees, required purchases, and other recurring obligations.
- Territory, exclusivity, relocation rights, competition from other locations, and online sales.
- Training, support, operating standards, required suppliers, remodeling, technology, and quality-control requirements.
- Trademark and brand licensing, confidentiality, operating manuals, customer information, and other intellectual property.
- Transfers, renewal, termination, default, notice-and-cure rights, personal guarantees, and post-termination obligations.
- Dispute-resolution provisions, governing law, forum selection, mediation, arbitration, and litigation.
- Statements concerning estimated initial investment, financial performance, outlets, and franchisee turnover.
The FDD and the Franchise Agreement Serve Different Purposes
The FDD provides required disclosures about the franchise offering. The franchise agreement is the binding contract that ordinarily governs the parties' relationship. The documents should be reviewed together because a disclosure, representation, or assumption in one document may affect how a provision in another should be understood.
Under the Federal Trade Commission's Franchise Rule, a covered franchisor generally must provide the FDD at least 14 calendar days before a prospective franchisee signs a binding agreement or pays the franchisor or an affiliate in connection with the proposed franchise sale. State requirements and particular circumstances may add other obligations.
Review for Prospective Franchisees
We help prospective franchisees understand the proposed relationship, identify significant obligations, prepare questions, and evaluate provisions that may warrant clarification or negotiation. Legal review does not determine whether a franchise will be profitable. Financial projections, financing, tax considerations, and business feasibility may require separate review by qualified accounting, financial, and industry professionals.
Review and Preparation for Franchisors
We assist franchisors with preparing and updating FDDs, franchise agreements, development agreements, guarantees, trademark licenses, and related documents. We also help coordinate federal disclosures, applicable state filings, annual updates, amendments, and internal procedures for compliant franchise sales.
Documents to Gather
For an efficient review, provide the complete FDD and all exhibits, the proposed franchise agreement, amendments or addenda, guarantees, financing documents, leases or site-control documents, side letters, emails containing material representations, and any deadline supplied by the franchisor.
Speak With Miami Franchise Counsel
If you are evaluating a franchise opportunity or preparing to offer franchises, Sanchelima & Associates can review the documents, identify material issues, and develop a practical next-step plan. Services are available in English and Spanish, subject to conflicts and engagement acceptance.
Related service: Franchise Formation Attorney in Miami