Buying a Franchise in East Texas: What to Review Before You Sign

From restaurants on Broadway Avenue to service brands across Smith County, franchises are a common way for East Texans to become business owners. A proven system can reduce risk, but the franchise agreement is written by the franchisor to protect the franchisor. You need to know what you are signing.

Read the Franchise Disclosure Document

Federal rules require the franchisor to give you its Franchise Disclosure Document (FDD) at least 14 calendar days before you sign or pay anything. The FDD has 23 required items. Pay special attention to the franchisor’s litigation history, initial and ongoing fees, the turnover rate of existing franchisees, and any financial performance representations.

Know the Real Costs

Beyond the initial franchise fee, expect royalties, marketing fund contributions, technology fees, required suppliers and remodeling requirements. Build a budget that includes all of them, and talk with current and former franchisees listed in the FDD.

Territory, Term and Renewal

Check whether you get a protected territory in Tyler or whether the franchisor can open another location nearby. Look at the length of the term, the conditions for renewal, and any fees or upgrades required to renew.

Exit Terms and Non-Competes

Most franchise agreements restrict what you can do after the relationship ends, including post-term non-competes. Understand how you can sell the franchise, what approvals are needed, and what happens if you want out early. For more on these restrictions, see are non-compete agreements enforceable in Texas.

Set Up the Right Entity

Most franchisors expect you to own the franchise through an LLC or corporation. Form it before you sign so the agreement is in the entity’s name. Our guide to forming an LLC in Tyler explains the steps.

Frequently Asked Questions

Can I negotiate a franchise agreement?

Some terms are fixed, but franchisors sometimes agree to changes on territory, development schedules or personal guarantees, especially for multi-unit deals.

Should I sign a personal guarantee?

Most franchisors require one. An attorney can explain your exposure and sometimes negotiate limits on the guarantee.

Talk With a Tyler Attorney

Reviewing a franchise opportunity? See our business formation services. Call Lindsey Birdsong, PC at (903) 595‑6297 or visit our contact page. Our office is at 2307 Dueling Oaks Drive, Suite 103, in Tyler.

This article is general information, not legal advice. Talk with an attorney about your specific situation.