Franchising Solicitors

Franchising can allow your business to expand while increasing income at the same time.

Every year, the number of franchised businesses in the UK grows, and we have valuable experience working with franchisees and franchisors to achieve their business goals.

If you are thinking about franchising your business, we provide you here with helpful advice on the steps you should consider:

• Understand franchising
• Demonstrate franchise-ability
• Produce business plans
• Ensure you have adequate capital
• Document everything properly
• Follow your own procedures
• Choose your franchisees carefully
• Maintain uniformity
• Be honest
• Plan ahead

Speak to our franchising solicitors today

To discuss franchising your business further, contact our Company Commercial team on 023 8063 9311 or email enquiries@warnergoodman.co.uk.

How our franchising solicitors can help you

Understand the franchising model

We'll take the time to ensure that you fully understand what franchising is and how it'll work for your business and the industry you are in. An experienced franchise consultant can provide helpful advice and guidance from the outset, or you can review the British Franchise Association (BFA) website here.

Demonstrate franchise-ability

To begin the process, you need to be satisfied, as does your franchise consultant or any other advisers that you use, that your business, or a variant of it, is capable of successfully being franchised. In essence, you need to be satisfied that it can be successfully replicated and that the market is of sufficient size to support your franchisees.

Produce business plans

You should have a comprehensive business plan and realistic draft plans for potential franchisees.

Ensure you have adequate capital

Although franchising is sought to be an economical way to expand your business, many franchisors fail due to the company having insufficient capital, meaning that it has to rely on the up-front fees from franchisees to keep it afloat. Although every business is different and the cost involved in franchising will differ, getting from concept to signing your first franchisee could cost over £100,000.

Document everything properly

Due to the complex nature of franchising, it is vital to have comprehensive and correct documentation in place, which, as a minimum, will include the franchise agreement and the operating manual. Prospective franchisees and their advisers will thoroughly examine your franchise agreement and, therefore, should be prepared by an experienced franchise lawyer, which is where we can help.

Follow your own procedures

Your franchisees will be required to operate in accordance with the franchise agreement and the operating manual. Any franchised outlets owned by you must also work in such a way as to ensure consistency throughout the brand.

Choose your franchisees carefully

The success of your franchisees will determine the success of the franchise. When selecting your franchisees, ensure that you take the time to get to know the individuals behind the potential franchised outlet. You want to prevent wasting valuable time dealing with underperforming or non-compliant franchisees when you could spend that time developing and managing your brand.

Maintain uniformity

It is essential that all of your franchisees sign the same agreement (although it may evolve over time). Do not be tempted to agree on changes to the agreement without first having sought the professional advice of your franchise lawyer. While using a side letter can be helpful, it is important that this is prepared professionally.

Be honest

The very nature of franchising dictates that, by and large, the franchisor has more power than its franchisees. The BFA's Code of Ethics requires fair play, and franchisors and franchisees should maintain honesty and integrity in their relationship with one another.

Plan ahead

As your business develops and grows, your business plan will need to change accordingly. Due to the nature of franchising and the documentation involved, existing franchise agreements may not be able to be changed for as long as five years. You should consider this when devising your business plan and making plans for the future.

Franchising FAQs

What is franchising?

Franchising is a business arrangement where a franchisor grants an individual (franchisee) a license to operate a business using its established brand, products, and business model.

The franchisee benefits from the proven success of the franchisor, receiving support, training, and marketing assistance. In return, the franchisee pays fees or royalties.

This model is prevalent in various industries, including fast food, retail, and services, allowing entrepreneurs to own and manage a business while utilising an established brand's reputation and operational framework.

What is the purpose of a franchise agreement?

The purpose of a franchise agreement is to outline the terms and conditions of the relationship between a franchisor and a franchisee.

A franchise agreement details the rights and responsibilities of each party, covering aspects such as the use of the brand, operational guidelines, training, fees, and the duration of the franchise.

It aims to maintain consistency across franchise locations, protect the franchisor's intellectual property, and help the franchisee replicate the business model successfully.

Are there any franchise restrictions?

Yes, the franchisor may choose to limit specific rights; this will typically be outlined in the franchise agreement.

Restrictions may include a non-compete clause, limiting the franchisee from starting a similar business in a defined area or for a specific duration.

The agreement may also specify operational guidelines, branding standards, and purchasing requirements to maintain consistency across franchise locations.

Understanding and following these restrictions is crucial for the franchisor and franchisee to maintain a healthy business relationship.

Can I terminate a franchise agreement?

Yes, termination of a franchise agreement is possible, subject to the terms outlined in the agreement.

Franchise agreements typically contain a termination clause that outlines the circumstances under which either party can terminate the agreement.

It is crucial to carefully review the termination clause to understand the conditions, notice requirements, and any potential consequences associated with ending the franchise agreement.

Franchise agreements can also be terminated using other methods, such as if one party breaches the terms of the franchise agreement or both parties mutually decide to terminate the contract. However, circumstances have to be met for this to be possible, and this will depend on the nature of the franchise agreement.

Seeking legal franchising advice before taking action is advisable to ensure compliance with your contractual obligations and mitigate potential issues.

How can I protect my franchise?

You can take several steps to protect your franchise and maintain a positive business relationship.

• Registering your trademark provides legal protection and exclusive rights to your brand's name and logo.
• Having a comprehensive franchise agreement helps you maintain consistency across all your locations and prevents future potential franchise disputes.
• Strict quality control measures ensure that every product or service meets high standards.
• Regularly monitoring franchisees and using non-disclosure agreements can help you safeguard sensitive brand information.

Proactively taking these measures can help you protect your franchise brand in any situations that may arise in the future.

Speak to our franchising solicitors today

To discuss franchising your business further, contact our Company Commercial team on 023 8063 9311 or email enquiries@warnergoodman.co.uk.