Franchising Arrangements
A franchise agreement is essential if you're looking to franchise your business to third parties. A franchise agreement is a legally binding agreement between a franchisor and franchisee – with the franchisor granting the franchisee the rights to operate a business using the franchisor’s brand, systems, products and services in line with certain rules and obligations.
A franchise agreement should, amongst other things, cover clear details of the parties; a description of the business and systems to be franchised; a licence to use any trade marks and other intellectual property rights where relevant; payments due in respect of the franchise – both upfront and ongoing costs; obligations upon both the franchisor and franchisee to make the relationship work and a term for the franchise agreement.
As well as protecting intellectual property and clarifying obligations, franchise agreements can also help to mitigate risk for both parties. For example, the agreement should include provisions for resolving disputes, managing termination, or addressing non-compliance issues. By outlining these potential issues ahead of time, the franchisor and franchisee will be prepared to handle them together if they arise.
What should you be thinking about as a franchisor?
As a franchisor you need to address key legal, technical and commercial considerations in the franchise agreement. A franchise agreement will be fundamental to protecting your reputation and intellectual property rights of your business which you are franchising. The agreement should clearly set out your expectations of any franchisee. This would include for example initial training, ongoing support, and marketing assistance. You should also set out any expectations if the franchisee is to have a particular type of premises or any employees. The agreement should also make it clear what territory the franchisee can operate in.
What should you be thinking about as a franchisee?
As a franchisee you will want to make sure that you have a clear franchise agreement with a franchisor, which gives you the right to operate the franchise in the way you expect to. It should be clear what territory you can operate in and for how long, and how much you are expected to pay the franchisor both upfront and on an ongoing basis. You will also want to make sure that the agreement gives you the right to use any registered or unregistered trade marks if necessary.
How can we help?
We specialise in providing cost-effective legal solutions clearing your path to success, which means our bread and butter lies in crafting, reviewing, and dissecting commercial contracts including franchise agreements. We support the likes of Onfido, Multiverse, and Truelayer - ensuring they can build and bolster their commercial relationships.
In need of support from commercial contract lawyers in the UK? Get in touch with our commercial contract team.