Solicitor’s fees for reading a franchise agreement
When I talk to would-be Franchisees about a franchise agreement I take them through the main points and always advise them to discuss the agreement with their solicitor. In fact, they’re obliged to that under the terms of the agreement, so that they fully understand what they’re getting into. I never gave much thought to the fee a solicitor might charge for this service– until recently, when a prospect called me to say that her solicitor wanted to charge €2,000 to read over the agreement, warning her that “if I have to do any additional work on it the fee might rise to €5,000.”
What! The quote was outrageously high. Naturally, I told her to find another solicitor. Since then I have been taking great care to advise prospects to shop around. My own research has shown a wide variation in what solicitors will charge to read an agreement–from €300 from a one man practitioner to €900 for a multi-partner Dublin firm. All cautioned that their fee might be higher if they needed to take advice from other sources, or communicate with the Franchisor. Fair enough, but I would seriously question whether this would ever be necessary.
A franchise agreement from a reputable, established, company will be based on a particular format and any solicitor who is familiar with franchising should take no more than 45 to 60 minutes to read it, especially if the agreement comes from a member of the Irish Franchise Association, which will have approved the agreement before admitting the franchise to its membership. In my experience of having sold more than 50 franchises for various clients (and shown the agreement to dozens of other prospects who didn’t proceed for whatever reason) I only ever had one letter from a solicitor. He listed 10 points, but he was simply looking for clarification; he was not challenging the legality of the agreement. But no matter who has issued the agreement, for his own comfort the prospect should have it checked before he signs it.
High prices charged by solicitors to read these agreements might persuade some prospects not to spend the money and this would be a worry.
What’s your experience? Comments please!
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January 10th, 2009 at 10:45 pm
I was on Yahoo and found your blog. Read a few of your other posts. Good work. I am looking forward to reading more from you in the future.
Tom Stanley
January 25th, 2009 at 6:12 pm
Re your article on solicitor’s fees, before leaving a franchise agreement with your solicitor make sure you ask him if he understands franchising. Remember, that if he’s not familiar with franchising the solicitor will need to ask someone who is. He’ll get charged for this advice and you could end up paying for his education!
July 10th, 2009 at 2:38 pm
You have raised a very useful point here! This surely makes the franchisees aware of certain issues regarding franchise documents and how these things should be dealt with. The very high quotes of solicitors could really make the franchisees ask themselves if indeed it is necessary to spend that much. To help themselves in this aspect, it is best for them to refer to the best franchise guide for answers to their doubts and questions in mind.