Buying a Franchise? Here Are Some Important Legal Considerations

 Posted on May 29, 2025 in Business Law

The franchise business has many advantages. For one, you are starting off with a brand that is either widely known by consumers or that has at least established a positive reputation. In the best-case scenario, buying a franchise means buying a business model in which many of the relationships with vendors and the processes for success have already been determined. This lower risk profile comes at the cost of franchise fees and a lack of independence about how to run the business. There are unique legal considerations related to the purchase of a franchise. An experienced Greenwich, CT franchise attorney can advise you on your purchase. 

Common Legal Considerations for Franchise Investors

Franchise Disclosure Document (FDD)

The Federal Trade Commission (FTC) requires franchisors (franchise sellers) to provide franchisees (franchise buyers) with a Franchise Disclosure Document (FDD) at least 14 days before the purchase. Review the FDD carefully and be sure to ask the franchisor for clarification on any areas of concern. In particular, FDD Item 13 discloses the franchise’s trademarks, which are a key aspect in the decision to purchase a franchise, since one of the perks of a franchise is that it ideally comes attached to strong branding. You want to see that the franchise has registered its trademarks and that it will provide you with legal protection if any disputes arise about trademark use. 

Due Diligence

You should conduct due diligence on the franchise purchase. One of the most effective ways to do this is to talk to other franchisees. FDD Item 10 will contain the contact information of other franchisees. Be sure to speak to former and current franchise owners to really understand what running this franchise is like. If franchise owners do not have a non-disclosure agreement in place, they will be best positioned to give you the most accurate picture of what owning the franchise is like. 

Renewal Conditions

Franchise agreements are usually limited to a specific term. Check the franchise contract to see what that term is, whether you have the right to renew, and under what conditions you may do so. 

Franchisor Control

Be aware of how much control the franchisor has over your business decisions. What changes can you make in your own branch? Can you change menu items? What about small changes to the decor? It is important to understand the extent to which you can make your own decisions versus having to abide by the franchisor’s policy.

Call a Greenwich, CT Franchise Lawyer

When you are starting your franchise business and seeking legal counsel, you can turn to the experienced New York Metro Area franchise law attorneys at Ivey, Barnum & O'Mara, LLC. We represent clients on every aspect of franchise purchases, including franchise financing, franchisee assistance, and helping new franchise owners launch their businesses. Call us at 203-661-6000 for a complimentary consultation.