How to save $250,000 by working with franchise lawyers like Mike Reagan who is a franchise attorney with Warshawsky Seltzer, a boutique law firm specializing in law for franchising.
Mike’s time with Kahala Group started when they were only 60 units and over the next 17 years he helped the brand grow to owning 19 quick service restaurant brands with over 3200 locations! Working with the brand as they went through many acquisitions, Mike looked at 19-20 businesses for each acquisition Kahala made, meaning he has looked at literally thousands of franchise businesses and he’s been able to distill some ‘best practices’ out of all that experience.
Mike is passionate about helping first-time franchisees through the process of buying a franchise. He warns about a couple of ‘limitation of liability’ clauses that can be easily inserted into franchise contracts if things don’t work out. Nobody wants to think about things not working out when they first start a franchise but sometimes things happen and Mike’s advice is to be prepared.
Mike imparted two quarter of a million dollar pieces of advice into our interview today:
- “If you’re going to sign a lease, put the lease in a holding company with a personal guarantee that has an exit clause – if you exit the business you’re only liable for 6-12 months rent.”
- “If you’re signing a 10-year agreement with a franchisor, which most are, add an exit clause where if you exit the business, you pay X.”
Thank you Mike!!
The exciting developments in the industry are the services franchises Mike is seeing popping up everywhere. Not just traditional quick service restaurants any more, franchising is expanding into all sorts of industries.
There are two pieces of advice Mike, representing franchise lawyers, has for new business owners:
- While things are going well and you’re successful, secure access to some capital. Whether that’s a credit line or a home equity loan, take that source while you have access. Things can turn around suddenly and you’ll be glad you have it if something bad happens.
- On Day 1, set your exit strategy. What does success look like and what are you doing this all for? Is it to build to 10 locations and sell? Or to build the one location?
Matt’s advice is also to get close to your franchisor. By becoming a test store or a training store, or a referral for franchise development people, you can build kudos with the franchisor – then when you need something you’re more likely to get it!
Reach out to franchise lawyer Mike Reagan via email at [email protected].