New York Franchise Law Blog : Franchise Lawyer & Attorney Charles N. Internicola, Providing National Representation of Franchisees and Franchisors

Without question, successful businesses are dynamic, adapt quickly and succeed in "any" economic climate.  As a business lawyer, I have the benefit of working with and learning from hard working clients (with businesses large and small) who, time and again, rise to the challenge, accept the economy for what it is, make the necessary investments and take the necessary steps to adapt and succeed. Instead of hearing complaints about the economy or bad luck, they focus on expansion, the refinement of business systems and adding customer value.

Law is a business that is governed by the same set of "business principals". That is, to be successful, a law firm must be driven toward continuously developing and improving the critical systems and legal skills/assets necessary to consistently deliver "client value".  

So How do you Achieve Client Value?

"Client Value", as a matter of fundamental business principals, can only be achieved by evaluating the interaction and balance between (a) the legal fees charged , (b) the timeliness of the legal services rendered, (c) the quality of the legal services rendered, and (d) the priority of the legal project as measured by the significance of the client's business systems and/or goals that are supported or protected by the underlying legal services.

Basically, no one factor tells the story and only by combining a clear understanding of the clients business, business goals and business systems can a law firm deliver "valuable" legal services that balance all four factors.  Some examples to consider:

• Value cannot be achieved by a low legal fee if the legal services rendered fails to address or recognize future litigation contingencies that although not certain could be addressed and mitigated today;

• Value cannot be achieved by excellent legal services, if they result in high fees on a project or legal matter that will have little significance to the clients business or liability exposure;

•  Value cannot be achieved by moderate legal fees if the legal services do not meet the time line necessary to actually support the client's business.

The Value of a Small Focused Law Firm and Why Many Large Law Firms Can't Compete?

Today, with the specialization of legal skills, the expansion of technology resources and the refinement of business systems, the "experienced" small law firm or lawyer that possesses specialized and tested legal skills possesses a unique ability to deliver and offer a "client value" proposition that cannot be matched by the large firms. This is due to (a) the ability of the specialized lawyer to deliver a work product equal to or better than the large law firm, and (b) the imbalance caused by the large firms extensive overhead and the financial resources and salaries committed by large law firms to "inexperienced associates" - associates who will be working on your legal matters. 

What I am proposing is not universal (i.e. there are many large firms that I have witnessed deliver excellent value for particular matters) and that you should not decide on the retention of a law firm based solely (or primarily) on the size of the firm or the number of lawyers . Rather, focus should be placed on the skills of the individual lawyer that you will be working with and what factors the lawyer evaluates in delivering legal services and measuring "client value". My Bet, the specialized and experienced "small firm" lawyer will win this balancing act every time.

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(Great, a lawyer answering a question about whether you need to hire a lawyer)

Answer? Yes - but not right away.  

The competent advice and guidance of a franchise lawyer will serve as a valuable tool (one of the many "tools" that are required) to be utilized on your road to entrepreneurship and the purchase of a franchise.  The advice provided by your franchise lawyer should be based on practical experience and involve a detailed review of the proposed franchise agreement and franchise disclosure document (FDD) and be followed by negotiatios with the franchisor.  However, while hiring a franchise lawyer is critical, it should not be your first step.

So what do I mean by "not right away"?  The process of buying a business is not a "sprint" (at least it should not be) but rather an "endurance event" that will require you to seriously evaluate your individual needs, business skills and expectations.  Once you have made this assessment, you will be faced with the challenging task of finding a business that is both profitable and right for who you are and your skill sets.  This is no easy task and will require that you do significant research (tons of resources available on the web), communicate with other business owners, communicate with existing franchisees (to do this, see "Contact Existing Franchisees before Signing a Franchise Agreement") and, possibly, seek out the advice of franchise professionals.  Don't just pick or get stuck on one particular franchise model or limit your research to the information provided to you by the franchisor's salesperson.  Remember, first and foremost, what matters most to a successful franchise investment are "profits" that will be  measured by your ability to take home money to your family each and every month.  So question everything.  If the franchise sells soup, then question how you will earn "profits" in the summer.  If the franchise sells ice cream, understand how "profits" are generated in the winter.  If the franchise appears to draw long lines or generate large revenues, then question what percentage of  those long lines and revenues are converted into "profits". 

Once you have completed your own internal analysis and "business review" , thats when the legal advice and analysis becomes critical.  The franchise agreement that you will sign will serve as the blueprint and road map for your business for many years to come.  As such, there are many, many critical issues that you must address with your franchise lawyer.  Some of the many issues that you must discuss and evaluate, include:

• The franchise fee that will be charged;
• The continuing royalty that you will be paying on a monthly or weekly basis;
• Advertising fund fees that you may or may not be required to contribute to;
• Approved vendors and suppliers of the supplies and products critical to your business;
• The protected territory that you may or may not be granted;
• Buildout and lease obligations that you will be required to undertake;
• Many, many other issues.

In many instances, (contrary to statements by a franchise sales person that their franchise agreement is "non-negotiable") your franchise lawyer will be able to negotiate and implement modifications to your franchise agreement that will have a substantive impact on your franchise investment and increase the odds for your success.  In today's economic climate, my experience has been that franchisor's are more willing than ever to negotiate with new franchisees.  Even things like deferring "royalties" for a number of months.  

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