What is Franchising?
Franchising is a form of licensing agreement. The Franchiser (or Franchisor) transfers to the franchisee a business concept which the franchisee can utilise within a given territory and in return, the Franchiser will receive royalties for the use of the license.
A franchising agreement is used by the Franchiser and normally stipulates the franchisee will be supplied with expertise, branding, corporate image and management support.
A Franchise Agreement is for use where one party, the franchisor, wishes to licence out its business to another, the franchisee. In return for being permitted to use the trademarks and other intellectual property of the franchisor, the franchisee will pay a fee.
It can be very difficult for a business owner to decide if the best way to grow their business is to expand or to franchise……
- Key Benefit to the Franchisor: The ability to grow your business (and brand) without having to open new sites, employ staff, manage new premises. There is decreased growth risk and increased growth capital.
- Negative to the Franchisor: you will have less control over management and the day to day running and often the different territories will not assist and support each other the way you would hope!
Equally, for an individual looking to start up a business, do you start from scratch, or purchase a franchise?
- Key Benefit to the Franchisee: have a readymade business that has been tested by the franchisor already. All regulatory and legal considerations have already been taken care of!
- Negative to the Franchisee: you cannot simply decide to expand your business. You are only licencing it for a term, therefore if you wanted to expand you would have to purchase a further territory.
We have spoken with our Franchisor clients that have taken the leap to franchise their business and they all give similar advice to those looking to follow in their steps;
- Be selective – vet applicants for a franchisee position in order to prevent failures with new branches, failure to do so can lead to damage to your brand image. Franchisors are often very clear about the type of people they want to recruit. They select based on professionalism, the right image, communication skills and core business competencies to ensure they are successful.
- Protect your brand – remember this is the most valuable asset you have! You must establish clear guidelines for the use of all of the brand assets.
- Location, location, location – keep them close to your home territory at first. You’ll want to easily visit in the so you can monitor and learn.
- Get a lawyer –Choosing the right franchise lawyer is key to becoming a successful franchisor. Entering the world of franchising is a complex venture, and a good solicitor can protect your interests.
Parker Arrenberg Solicitors can offer the following Franchising services:
Advising and drafting:
- Franchise Agreements
- Company handbook
- Staff handbooks
- Employment contract
- Service contracts
- Funding agreements
- Terms & Conditions of business
- Regulatory advice (including data protection)
Your solicitor will always ensure that you are fully aware of any fees involved, and where possible we will work to a range of fixed fees depending on your requirements. If that is not possible, we will provide you with a very clear and transparent fee quotation that ensures you fully understand the fees you need to pay and what is included in those fees.
Get in Touch with our Commercial Law Solicitors Today!
Our Commercial Law team at Parker Arrenberg are experienced in a wide range of industry sectors based in South East London, Catford and City of London. In our ever-changing legal landscape, we value a solution-based approach and will stop at nothing to ensure the job is done and that our client’s legal needs are met.
We are always only a call or email away should you need us.
For all your legal needs, get in touch with one of our expert solicitors today. For general enquiries please call 020 8695 2330. You can also email us at email@example.com and we will get back to you.