This post continues our Buying a Franchise series. Before signing any agreement it is so important that you consult a lawyer, especially one specialising in franchising. Franchising is a complex business structure with specific legal requirements, using a non-franchise lawyer is therefore not in your best interest.

You will most likely be provided with a pro-forma copy of the franchise documentation. If you receive only a summary of the Franchise Agreement or just the Disclosure Document ask for a full copy. No reasonable franchisor should refuse this request.

A franchisor that won’t provide a full copy of the franchise agreement should ring warning bells. If the franchisor refuses to provide one – walk away.

The franchisor should provide you with a copy of a Disclosure Document as well as the Franchise Agreement.

The purpose of a Disclosure Document is to provide:

  • Information on the sector the franchise operates in,
  • The history of the business of the franchisor,
  • Who the directors and shareholder are,
  • The business history of the franchisor’s directors and key officers including any previous history of business failure they may have been associated with,
  • The number of units granted, opened and the units that have closed or been terminated,
  • The capital costs including working capital needed to establish the franchise and the profit and loss model based on the performance of current franchisees,
  • The intellectual property being licensed.

You should engage a specialist franchise lawyer with experience in both business and franchising to review the proposed agreement, disclosure document and any other documentation the franchisor provides.

There is no value in engaging a non-specialist to review the Franchise Agreement because such agreements are, by their nature, substantially different to ordinary business contracts.

A specialist legal advisor is a must. It’s a worthwhile investment and importantly saves you the investment of paying a lawyer to learn franchising at your expense.



DC Strategy has over three decades of experience and is looking to the future as we take businesses and grow their enterprise value through franchising. In our newsroom you can find news on franchising, marketing, recruitment and business information, legal advice for businesses and information about franchise opportunities.


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