How can a lawyer help with franchising your business? And how can they help you buy a franchise?

Author: Emma Shipp
How can a lawyer help with franchising your business? And how can they help you buy a franchise?

Whether you are a franchisor (an individual with an established business that wants to expand it by selling the right to use its name, brand and/or idea) or a franchisee (that’s an individual wanting to start a business using a proven business format, brand, name etc), you will unequivocally benefit from the expertise and guidance of a lawyer as you embark on this journey.

Simply put, the process looks like this:

  • The franchisee signs a franchise agreement - a legally binding contract and pays their initial franchise fee.
  • The franchisor provides everything they need including an instruction manual, training and ongoing business support (although the exact terms of what they’ll provide will be set out in the agreement).
  • The franchisee pays a monthly fee (usually set or a percentage) to continue using this brand and so on.
  • The franchisee runs their (usually local) business under the established brand name.

If you are franchising your business (Franchisor)

When you are first starting out it is helpful to ask yourself whether your business model can really be franchised. Are your clients loyal to the brand or to you as the owner?

If it’s the latter, then franchising may not be the right choice. It needs to be a successful business that can be taken on by other business owners (franchisees) and replicated in its ethos, branding and systems.

Also, ask yourself, can you afford to franchise your business?

It goes without saying, that done correctly there are real opportunities to make money through franchising your business but it does bring a plethora of costs with it such as writing the franchise agreement, the operations manual, implementing your business model, recruitment of franchisees and marketing.  There is up-front cost for (hopefully) long term benefit.

As well as offering guidance on the above, a lawyer can advise on the following aspects of franchising:

  • Drafting and reviewing franchise agreements as well as the many other agreements that can be put in place to protect your business interests (for example, confidentiality and deposit agreements).
  • Franchise valuation.
  • Intellectual property and brand protection.
  • Resolving disputes between franchisors and franchisees.
  • Employment law issues associated with a franchise.
  • Property matters connected with franchising.
  • How you can exit the arrangement while preserving your brand intact.

TOP TIP: Don’t skimp on finding the right legal advice on the franchise agreement. It is paramount you have a watertight contract in place that allows both the franchisor and franchisee to know their rights and to avoid breaches or disputes, which could lead to a breakdown not only in communication but in the business itself.

If you are buying a franchise (Franchisee)

Whether this is your first foray into franchising or you are a seasoned franchisee, having a lawyer onboard is a sure fire way to ensure that you are supported through each stage of the process from signing the agreement through to the everyday running of your business.

A lawyer can offer guidance on:

  • Drafting and reviewing franchise agreements as well as the many other agreements you might be asked to sign (for example, confidentiality and deposit agreements).
  • Franchise renewals.
  • Intellectual property and brand - what you can and can’t do with your franchise.
  • Property and employment advice.
  • Disputes or breaches of agreement with your franchisor.
  • How you can exit the arrangement without losing all your investment.

TOP TIP: As well as these aspects, a lawyer can help you navigate the franchisor’s information pack as well as investigate the legitimacy of your franchisor before you sign on the dotted line. They can also help you find any hidden costs such as if you will need to pay for training.

Think you might want to investigate the franchise world? Want to get some legal advice? Want to find the right lawyer for your business? Book your free 30-minute consultation with one of our advisors by clicking here. We’ll talk through the options and suggest at least two law firms that we think are a good fit for your business. We aren’t paid any commission and you won’t be under any pressure to work with any law firms we put forward.