Legal Services for Business and Real Estate

Due Diligence—Buy a Franchise

There are many crucial factors to consider when making important decisions concerning franchises. There are critical steps to when purchasing a franchise.

Steps to be considered once you have decided to purchase a franchise:

Read the Franchise Disclosure Document (FDD, formerly UFOC). This disclosure is required by the U.S. Federal Trade Commission, and many of State Disclosure Laws. It describes among others the investment you will be making, the anticipated initial costs, your legal obligations, and the background and financial strength of the franchisor, among other things.

• Contact current and former franchisees. Ask lots of questions, including ones to help you determine the strengths and weaknesses of the franchisor, AAHOA, Other AAHOA members, family and friends who are franchisees’ of same or similar brand of hotels.

• Review the franchisor's financial strength and list of litigation with existing or former franchisees.

• Market Feasibility – Which brand will work at your location.

• Consult an experienced franchise attorney. SLG has the experience to advise you on the risks and advantages in making this substantial investment before you sign a franchise agreement.