Franchises Attorney in New York, New York

How does buying a franchise work?

New York, NY franchise law attorney Richard L. Rosen explains how buying a franchise works.

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well it depends if you’re buying from a

franchisor the franchisor has to give

you uh disclosure uh usually in the form

of an fdd they have to

provide you

with other documents that you have to

give to them you have to give them an

application you have to tell them about

your financial uh background you have to

tell them about the things that you’ve

done uh what your field is they assess

that and then if you if you qualify they

usually have a meeting so that they can

assess you personally if you get beyond

that stage now the franchisor gives you

all the documents that you have to sign

including of course the franchise

agreement the guarantee the software

agreement the confidentiality agreement

the trade secret agreement all the

various things that you have to sign as

a uh as a franchisee to become a

franchisee so the franchisor documents

are in that category

if you’re buying from a franchisee it’s

somewhat different because now you’re

buying a going business

so you’re still going to get a lot of

that disclosure but you’re going to get

financial information from the

franchisee that you’re buying from their

tax returns financial statements you’re

going to want to get their lease because

you’re going to be taking over their

lease and while the franchisee doesn’t

have to give you

uh disclosure

what really happens is that the

franchisor usually says well if you sell

an agreement franchisee your buyer is

going to have to sign the current form

of franchise agreement and that triggers

the obligation on the franchisors part

to give you that disclosure that we just

discussed

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