Every small businessman fears a potential lawsuit may run them out of business; and unfortunately, it can happen at any time especially in our litigious society. Most small businesses encounter a few lawsuits during their years in business, and generally it is from an employee, or a customer, or I should say rather a pre-tenda customer or a pre-tenda employee.

For instance, a customer who pretends to be a shopper, just happens to have a little slip and fall accident, and just happens to have three witnesses and two of them with video cameras. Or a pre-tenda employee who really doesn't want to work, has already filed two other lawsuits with two other previous employers for workers compensation, suddenly and not-so-surprisingly has another accident.

One unfortunate thing about franchising that is unlike other businesses is they become a target because of their strong brand-name association with the parent company. Another unfortunate thing is the individual filing a lawsuit generally names the franchisor corporation as part of the lawsuit, because lawyers look for deep pockets in such lawsuits.

So, in a way it is a double edge sword for franchisees, they buy a franchise because of the strong brand name which drives customers to their location, but at the same time it also drives unscrupulous individuals who file bogus lawsuits. Most franchisees realize the reality of these legal risks, and they use insurance and number all policies to protect them.

Nevertheless, a franchisee must be ultra-careful because not all types of lawsuits are covered by insurance, and therefore, they must follow all the rules regarding workplace safety, and work very hard to prevent any lawsuit that might be also considered a violation or crime. It's too bad that franchisees have to fear lawsuits, but it kind of goes with the territory. Please consider all this.