Franchising

More and more businesses are using franchising to grow; it’s a huge opportunity when the right legal protection is in place.

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CONTENTS

For franchisors
In-House Counsel
For franchisees
Fixed fee franchise agreement reviews
Franchising work examples
Our advice in the press
How we work with you

Get in touch

For franchisors

When you run a business that delivers quality, you can’t afford to drop the ball, and your franchise network needs to run like clockwork. We understand that not only is it crucial that you have the right franchisees in your network, but you need robust franchise agreements in place, and strategic commercial support from your legal team.

Whether you already have an established franchise network, or you’re in the early stages of this growth strategy, our specialist team will provide the expert advice you need for a happy and prosperous franchise network.

Services include:

drafting and reviewing franchise agreements, deposit agreements and confidentiality agreements;
intellectual property and brand protection strategic advice;
acting on franchise re-sales;
resolving complex franchise disputes with franchisees;
employment law issues associated with the franchise;
considering and advising on all property related matters arising from and connected with franchising; and
all other legal issues that may be associated with franchising.

In-House Counsel

Our team of experienced lawyers is well-equipped to support you in various ways. Whether you require advice on a specific issue, additional resources due to capacity constraints, or a second opinion, we are here to help. Explore our legal counsel page for more information and details on our schedule of seminars, specifically designed for in-house counsel.

For franchisees

Are you about to take on a franchise, or perhaps you already run a franchise but need specialist legal help with your agreement?

Taking on the running of a business means both a financial and emotional investment so having the right legal support is crucial. Whether it’s getting your franchise agreements right, support through the buying process or commercial advice on the running of your franchise, our in house specialist can help get you and your franchise to where you want to be.

Services include:

franchise agreement reviews;
assistance with renewals;
franchise purchases and sales;
property and employment advice; and
disputes with your franchisor – we can advise on your legal position and options.

Fixed fee franchise agreement reviews

If you are taking a franchise we can review your franchise agreement (typically 40-60 pages long) and produce for you a comprehensive, written report on a competitive, fixed fee basis. Our report will advise on the key aspects of the franchise agreement and appraise you of any particularly onerous or unusual provisions.

The majority of franchise agreements are non-negotiable, however we see our role as ensuring you fully understand the financial and personal obligations you are signing up to. If any negotiations with the franchisor are required we can assist with these on your behalf for an additional charge. We have experience advising prospective franchisees in a wide variety of business sectors.

Download our Franchising Brochure.

Franchising work examples

Drafting a UK franchise agreement for a Canadian educational franchise commencing franchising in the UK. We advised on and registered the franchisor’s UK trademarks. Client had an established franchise brand in Canada and other countries but needed assistance from a UK lawyer to bring the franchise to the UK. We adapted their existing franchise agreement for the UK market.
Drafting a UK franchise agreement for an international food outlet brand expanding its franchise network into the UK. We advised on UK franchising practices and assisted the franchisor with securing bfa membership. We also advised on UK brand protection strategy and data protection (GDPR) compliance. We drafted supporting contracts for the sale of equipment and ingredients from the Franchisor’s headquarters in mainland Europe to UK franchisees.
Drafting a pilot franchise agreement (i.e. test agreement) for a UK programme focused on talent returning to jobs in STEM for a franchisee in Australia.
Drafted a franchise agreement for a high end car valeting business. Their franchise agreement required very detailed bespoke wording for their particular business model.
We have advised Toni & Guy franchisees on new franchises, franchise purchases and renewals for over 10 years. We have extensive experience of the T&G franchise documents so can provide our legal review service on a cost effective basis and move the deal to completion quickly.
Purchase of Bluebird Care franchise from an existing franchisee. Franchise re-sale, acting for the purchaser.
Sale of First Intuition Reading Limited to its franchisor First Intuition Limited (accountancy training).
Sale of First Intuition Bristol Limited to the above buyer.
Sale of First Intuition Maidstone Limited to the above buyer (all separate transactions).
Sale of Auditel (U.K.) Limited to TMA Group Holdings Limited (Auditel is a carbon reduction franchise business).
Purchase of Greencote Limited (in litigation – the target is a Bluebird Care franchisee).

Our advice in the press

How we work with you

Whilst based in the South of England, with offices in Southampton, Winchester and Bournemouth, Paris Smith acts for businesses and families throughout the UK. Technology has enabled us to provide a high level of service to our clients whether they are local to our offices or not. Our advice can be given in many ways:

Over the telephone
Online appointments
In face to face meetings

We will talk through how you would like to be contacted and the best ways for us to meet in our early conversations with you.

CONTENTS

For franchisors
In-House Counsel
For franchisees
Fixed fee franchise agreement reviews
Franchising work examples
Our advice in the press
How we work with you

Get in touch to speak with an expert.

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Franchising Frequently Asked Questions

What is a franchisor?

A franchisor will have an already established business that it wishes to expand. It will do this by selling to a franchisee the right to sell its original products and/or services using its branding, expertise, ‘system’ and intellectual property for a set period of time, typically within a specified geographical area (the ‘territory’).

What is a franchisee?

A franchisee is a small business owner who has purchased the right to use the trademarks, branding, knowledge and ‘system’ of an existing business in order to market and sell the same branded products/services and uphold the same standards as the first business.

Franchisees become owners and independent operators of third-party outlets/branches called franchises, which are essentially replicas of the first business.

How can you start a franchise business?

If you have an existing business which you believe you could grow and expand through franchising, the British Franchise Association (BFA) website is a good place to start for prospective franchisors. The BFA run courses for those interested in franchising – either as a franchisor or a franchisee and their website is a wealth of useful information for those starting out. You will need an experienced franchise consultant to guide you through the process and assist you in getting your processes and ‘operations manual’ in place. The BFA has a list of accredited service providers to the franchise industry.

Also crucially important will be protective legal documents drafted for you by a solicitor specialising in franchising. You will also need to protect your intellectual property with trademarks if you do not already have these registered. Please see our blog.

If you are interested in becoming a franchisee, exhibitions are held each year attended by franchisors keen to sell their franchises. Research what type of franchise business you are interested in and what the financial commitment is. Due diligence is key. When you have a copy of the proposed franchise agreement, ensure that you get a franchise solicitor to review it for you and advise you on its key terms, your obligations and liabilities – this will be money well spent. Please see our blog.

How does a franchise agreement work?

The franchise agreement is the document that governs the relationship between a franchisor and a franchisee. In the absence of specific franchising laws in the UK, that relationship is almost exclusively governed by contract law principles.

The agreement sets out the rights that a franchisee has, the roles and responsibilities of the parties and plenty more besides. Franchise agreements will vary substantially depending on the franchise network and the lawyer drafting them, however most tend to follow a similar template. They are lengthy and complex documents and a drafted in favour of the franchisor, hence why it is so important franchisees fully understand what they are signing up to.

How much money do you need to start a franchise?

This will vary from franchise to franchise. For a small, working from home business you may pay less than £10,000 in respect of an upfront initial fee to cover your licence, training and any equipment needed plus (typically) a monthly management and/or marketing fee for the duration of the franchise term of around 10% of your turnover. At the other end of the spectrum a well-known fast food franchise could cost you an upfront fee of £250,000 plus.

How can you finance a franchise business?

From your own savings (many franchisees enter franchising after receiving a redundancy pay out) and/or many of the main banks in the UK, specialise in franchise finance. We would recommend seeking finance through their dedicated franchise departments for the best service. Members of the BFA include HSBC, Natwest, Lloyds Bank and Barclays.

Is a franchise a sole trader?

A franchisee can operate as a sole trader (particular if turnover is anticipated to be low) however many franchisees incorporate a limited company, in order to benefit from limited liability, so far as their customers and suppliers are concerned. Note that typically if the franchisee does this, the franchisor will require that the human being(s) behind the franchisee company (usually the shareholders and directors) personally guarantee the obligations of the franchisee company.

How do I sell my franchise business?

The franchise agreement should set out a fairly strict procedure to be followed in the event the franchisee wishes to sell its franchise business. Typically, the franchisee must not be in breach of any of the terms of the franchise agreement and the franchisor will need to approve the incoming purchaser and ensure that they sign a new franchise agreement. There may be fees involved for both the outgoing and incoming franchisee and again, the Agreement will cover this.