Franchising Agreements
If you have developed a highly successful business model and recognisable brand it may be appropriate to consider expanding through licensing or franchising.
Franchising involves achieving a successful business model that is profitable, so that another business owner, who is granted a licence to use your intellectual property, business format and experience, can follow your success.
In return for being permitted to use the IP of the franchisor, the franchisee usually pays an initial fee and royalties based on a percentage of turnover or profit. Franchising allows the franchisor to grow their business without having to open, staff and manage new premises, branches or outlets themselves. This means the franchisor can extend this part of its business without having to raise capital to do so, while still retaining considerable control over what the franchisee does with the business.
The franchisee is able to manage what is effectively its own business, which has been thoroughly tested by the franchisor already, and is able to make reasonable use of the franchisor’s business expertise and model. For the franchisee, franchising represents a low risk method of going into business using a tried and tested formula.
How can we help you
The exact content of the agreement will depend on the type of franchise and we will advise you on the best approach to take before entering into a franchise to extend your business. A franchise should consider the following:
- obligations of the franchisor and franchisee
- intellectual property
- payment provisions
- confidential information
- education and training programmes
- duration
- warranties
- termination
A franchising agreement should be drafted and reviewed on behalf of both parties by experienced lawyers to ensure that both parties’ interests are protected by the agreement, and that neither is exposed to unreasonable commercial risk.
If you would like to find out more about franchising, contact us to arrange an initial free chat.
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