Anyone who needs a lawyer for a franchise-related problem should seek out a lawyer who understands the Federal Trade Commission’s Franchise Rule. That Rule requires franchise sellers to give their buyers a Franchise Disclosure Document (“FDD”) before making the sale. In some states the franchise seller is required to submit the FDD to a state agency for registration before it can offer franchises. Franchise sellers who violate the FDD rules can be penalized by the FTC, and in some states, including Ohio, their franchise buyers can file their own lawsuits for violations for up to five years. If an Ohio franchise seller violates FDD rules, the buyer is given the right to bring a lawsuit for up to five years, and terminate the arrangement, get their money back, and recover up to three times the amount of their damages. They can also get their own attorney fees paid. Hiring an experienced FDD Lawyer can prevent that.
Only an experienced franchise lawyer has the knowledge and experience to understand the FTC Rule requirements and to prepare compliant documents or analyze a franchisor’s FDD documents. Since the FTC Rule contains the requirements for preparing and distributing the FDD, some people refer to these franchise lawyers as FDD Lawyers.
- If you’re a business owner wanting to sell franchises, you need an FDD Lawyer to work with you to design your franchise system, prepare your Franchise Agreement, and write your FDD. The FDD review Lawyer should also provide guidance about proper sales techniques and pitfalls that can result in violation of the FTC Rule.
- If you’re interested in selling your franchises in multiple states, you need an FDD Lawyer to get your offering registered in some of the 15 or so states that require this and to tell you about state specific rules on selling techniques and content of the FDD.
- If you’re someone who wants to buy a franchise, and has received an FDD package from a franchisor, you need an FDD Lawyer to review your FDD package. You should not even consider signing a Franchise Agreement without a legal review, and you should find an accomplished FDD Lawyer to do your review. (Note that the FDD package always includes a copy of the proposed Franchise Agreement.)
- If you’re someone who owns a franchise and now wants to exit the franchise system, or you are being threatened with termination by the franchisor, an FDD Lawyer can sometimes find the basis for getting you out of the system based on violations of laws or regulations in the franchisor’s original sale of the franchise to you.
If one of those scenarios describes your situation, you need an accomplished FDD Lawyer. Contact Attorney Stanley M. Dub to discuss your situation today!