Top 5 Mistakes to Avoid When Buying a Franchise

Buying a franchise can be an appealing path to business ownership — offering brand recognition, proven systems, and built-in support. However, even seasoned entrepreneurs can make costly mistakes during the process. Understanding the legal and financial risks before you sign any agreements is essential.

Failing to Review the Franchise Disclosure Document (FDD) Thoroughly

The FDD outlines the franchisor’s background, fees, and obligations. Many buyers skim it or rely solely on sales representatives. A business law attorney in Memphis can help interpret complex clauses and ensure transparency before you commit.

Underestimating Initial and Ongoing Costs

Franchise fees are just the beginning. You’ll also face royalties, marketing contributions, and operational expenses. Many franchisees fail due to unrealistic financial projections. Legal counsel can help you structure financing and assess total costs.

Ignoring Territory and Competition Clauses

Franchise agreements often define where you can operate. Overlapping territories can quickly cut into profits. An attorney can negotiate clear boundaries to protect your investment.

Overlooking Exit Strategies

Few franchisees think about how to sell or transfer their business later. Having a Memphis business attorney review resale and termination clauses can prevent future disputes.

Signing Without Independent Legal Review

Franchise contracts heavily favor franchisors. Before signing, always have an independent business law attorney analyze terms related to fees, restrictions, and liabilities.

Franchise ownership can be rewarding, but only if you approach it with due diligence. The attorneys at Mitchell Law Firm LLC help Memphis entrepreneurs protect their interests and avoid common pitfalls in franchise transactions.

📞 Contact us today to schedule a consultation.