Deciding which food franchise business opportunity is right for you begins at comparing comprehensive listings. Now, how can you narrow down the results? You can get the best gourmet food franchise when you have a consultant who knows what he’s doing. But, there’s one more thing to guarantee peace of mind. You need to do everything in your control to protect yourself lawfully. The proper way to do it is to hire a franchise lawyer.
Learn the benefits of having a legal expert by your side.
Compliance to the FDD
Before you can be a franchisee, you will be presented with a document composed of 150 to 200 pages. This is the Franchise Disclosure Document or FDD. You need to study this document by heart. It states all the obligations and things you should not do as a franchisee.
Some entrepreneurs are not aware of some sections or having difficulty understanding the entire document. This is the reason they hire an attorney. Having a legal expert by their side gives them an assurance that they don’t get terminated by the franchisor.
When you desire to buy a franchise, there are lots of lawyers in the U.S. who can help you. Take note that you need to choose the one who specializes in franchising so that you won’t have any issue along the way. Most franchising lawyers write FDDs, so they know everything included in the document.
Guidance on Choosing a Business Entity
Your legal expert will guide you in choosing the right business for your new franchise. It is important to know your legal rights and responsibilities as a franchisee. Your attorney will assist you in handling the tax matters correctly.
In franchising, there are various types of corporations to think about, such as the following:
- C corporation: This is any corporation that is taxed separately from its owners, following the U.S. federal income tax law.
- S corporation: For federal tax purposes, shareholders process the corporate income, losses, credit, and deductions. In other words, the revenue of an S corporation is taxed at the shareholder level, rather than the corporate level.
- Limited Liability Corporation: This type of corporation is a mix of partnership and corporate schemes. Most single owners prefer this kind of business.
- Non-profit Group: This is a type of organization wherein the members don’t distribute the money as income or dividends. Instead, they gain surplus revenues to meet their organization’s goals. This means they use the money for organization preservation, expansion, and plans.
The shareholder is the entity or person who owns shares of stock. There’s another term that you need to be familiar with: incorporation. Your legal expert can explain better how to name a company correctly.
Safeguarding You to Avoid Choosing the Wrong Path
You want to buy a franchise because you want to earn a considerable amount of income. Reading the Franchise Disclosure Document is important. If you don’t have the time, your legal expert will do it for you and explain everything before you make the final decision. Some entrepreneurs experienced too much depression when their business went south. The culprit is the failure to understand the FDD.
If the franchise development director instructs you that a legal expert is not necessary, you should think twice. To have a rewarding food franchise business, consulting a franchise attorney is necessary.