Services for Franchisors

Posted on

Franchising your business

First steps

Franchising has proven itself to be a solid way to expand a business into a wider network through the replication of a successful and proven business concept. The development of a franchise network often leads to a business that is both robust and successful but a large amount of the success is dependent on careful planning beforehand and putting in place strong foundations.

If you are considering franchising your business – whether taking a new concept to market or converting an existing employed business to franchisees – we can help you with the planning and creation of those foundations.

Our experienced team are able to provide advice and guidance on:

  • the suitability (or otherwise) of a business concept and the proposed business structure
  • the legislative hurdles to be overcome or managed, such as EU and UK competition laws, Trading Scheme regulations, data protection, Carbon Reduction Commitment rules ,licensing laws or charity law implications
  • employment issues to be considered when converting an existing workforce
  • master franchise and master development agreements
  • compliance with the technical requirements of the British Franchise Association where you intend to apply for membership

Standard documents

Our Franchising lawyers can prepare all of the template agreements needed by a franchisor to set up a franchise network including:

  • franchise agreements
  • pre-franchise documentation (confidentiality, deposit agreements etc)
  • leases or sub-leases for premises to be occupied by the franchisee
  • asset/business transfer agreements for employees converting to become franchisees or for franchise re-sales
  • employment contracts and trading documentation for franchisees
  • software licenses to franchisees
  • website terms and conditions and privacy polices

We regularly work with clients' franchise consultants and accountants when putting together standard documents and believe that this holistic approach benefits franchisors greatly.

Prospectuses

A key document when recruiting franchisees will be your prospectus. It can often be tempting to gloss over or play up certain aspects of your franchise package to help recruitment or be less than clear on the source of projected figures included in the prospectus. However, inaccuracies or misrepresentations in your prospectus or other marketing materials (including template business plans or business models) can land franchisors in significant trouble later on if the franchisee's business starts to suffer. We can review your marketing and recruitment documents with you to ensure that risks are minimised wherever possible and BFA membership requirements are met.

Updating agreement

Our team also regularly review and update existing contracts and documents for franchisors looking to revamp their agreements and/or bring them into compliance with legislative changes or changes in BFA membership requirements.

International expansion

Where a successful UK franchise is looking to expand into international markets we can assist by putting in place mater franchise or master development agreements, as well as being able to put clients in touch with specialist franchise lawyers in the target countries to ensure that local legislative requirements are met. The firm's membership of the worldwide TAGlaw network of quality independent legal practices gives us the ability to service clients worldwide.

We also work with overseas franchisors looking to set up in the UK or grant a master franchise to a UK based business.

Managing your network

The hard work in franchising starts once you've set your network up and franchisee numbers start to expand. We can help franchisors with various aspects of managing a franchise network including:

Organisational change

We are able to advise on the difficult process of introducing major change into an existing network or, for example, converting an employed workforce into franchisees. We are equally able to advise on how to manage and transfer a network in the context of a business restructuring project.

Franchise re-sales

Franchise re-sales are now essential to most franchisors but the costs involved in business transfers are disproportionately expensive for most franchisees.

To help minimise the time and costs involved for all parties, we can prepare standard form documentation and procedures for franchisors to permit the resale process to be as trouble free for franchisees as possible.

We can also act for franchisors in the resale process to ensure that their interests are protected and help minimise the risk of franchisors incurring liabilities to the outgoing or incoming franchisee arising from the resale process.

Acting for your franchisees

We are able to act for a notional or actual group of franchisees/prospective franchisees (normally at the cost of the franchisor) during a change process when the franchisor is advised by other lawyers. This allows us to test the proposals and provide genuinely independent but educated advice to the franchisees/prospective franchisees and thus ease the process.

Brand Protection

The intellectual property rights of a franchise are one of the most valuable assets of the franchise business. When franchising a business, a franchisor must take steps to protect its brand, which includes its trade marks and other intellectual property rights such as material protected by copyright and confidential information. A franchisor with a successful brand can reap the benefits as this assists with franchisee recruitment and customer sales. Having in place a robust franchise agreement is the first step to ensuring that franchisees are clear how they are permitted to use the franchise's IP. Of equal importance to the network as a whole is also ensuring protection is in place for the brand which will minimise the risk of people and businesses outside the network damaging the brand.

We are able to provide advice and guidance on trade mark protection, trade mark applications and intellectual property portfolio management. Our franchise team includes specialist IP and Trade Mark attorneys and lawyers who handle UK and Community trade mark applications and with agents worldwide can arrange trade mark protection anywhere the franchise operates. Our range of IP services also includes:

  • clearance searches which advise whether the franchise's trade marks could infringe earlier trade mark rights which is particularly relevant for new franchisors
  • trade mark filing and registration and trade mark portfolio management
  • watch services and brand monitoring
  • brand strategy advice
  • trade mark infringement and investigations of use 
  • misuse of confidential information 
  • copyright protection and disputes 
  • design rights
  • domain name advice and dispute resolution

Purchase or sale of an existing franchise network

We advise on all areas of Franchising and business life and our experienced Franchising team can assist franchisors to sell their network and those looking to purchase an already established network.

Our Franchising team is supported by a multi-discipline firm capable of advising franchisors and purchasers on every stage of buying or selling a franchise network including:

  • disclosure of information about the franchisor and the network
  • identification of tangible and intangible assets of the franchisor that are to be bought or sold
  • deciding the structure of the transaction - share sale or purchase (if the franchisor is a limited company) or a sale or purchase of some or all of the business and assets of the franchise network 
  • employment law advice including consideration of the application of TUPE regulations
  • commercial property advice including sales and transfers of leases
  • tax advice – corporate and personal 

We can guide franchisors or potential purchasers through the preparation, negotiation and completion of the sale and purchase agreement as well as dealing with matters associated with the transaction, such as transferring ownership of trade marks and other intellectual property, to permit an easy transition from seller to purchaser for both the franchisor and the franchisees in the network.

Our banking team can also advise on and negotiate the terms of any financing arrangements required to complete the purchase, as well as handling the release or discharge of any existing arrangements post completion.

Franchisors and Property

Our property franchising team are ready to advise and work with franchisors throughout a franchisor's involvement with a franchise property including:

  • the provision of a tailored precedent bank of franchise property documentation, including a lease for the franchisor and franchisee, an agreement for lease, a licence for alterations, rent deposit deed and a personal guarantee
  • investigating the suitability and reporting on the implications of acquiring specific property
  • negotiating and reporting on agreements to acquire a freehold or leasehold property
  • negotiating the lease from the property owner to the franchisor introducing necessary landlord concessions permitting future occupation and use by a franchisee
  • advising on appropriate leasehold structures and the need for additional security such as franchisee personal guarantees, or comfort through break clauses or options to acquire the sublease
  • negotiating subleases with franchisees; and
  • representing franchisors in events of superior landlord or franchisee insolvency or in enforcement situations following franchisee default.

Additional support is available from teams dedicated to planning, property litigation and management, construction and regulatory issues.

We aim to deal with franchisors' property concerns commercially and efficiently. We acknowledge the business need for the retention by the franchisor of appropriate powers over the franchised property. We also aim to represent the interests of franchisors in working with their franchisees to achieve the optimum property arrangements to enable a successful franchise operation at the premises. All property documentation will be tailored to work with alongside a suitably drafted franchise agreement.

Disputes with your franchisees

Franchising disputes will arise even between good franchisors and good franchisees. Litigation can be hugely expensive and distracting for the franchisor. Our Franchising team includes specialist litigation and dispute resolution lawyers with a strong track record of managing and resolving franchising disputes. We are able to provide assistance with the following:

  • acting for franchisors in disputes with individuals or groups of franchisees
  • alternative dispute resolution (ADR), including the provision of mediation and arbitration assistance 

We aim to resolve the dispute in a quick and cost effective way. We work with franchisors in managing the dispute. 

Our specialist mediators are skilled in handling franchise disputes both for the firm's own clients and between third party franchisors and their franchisees. The firm is one of a small number of UK firms to whom the British Franchise Association refers disputes between its members and their franchisees.

We can also advise franchisors who use the British Franchise Association's arbitration process.

Where disputes cannot be resolved by informal means or alternative dispute resolution, and court proceedings become unavoidable, we will assist you with this process. From commencing the claim in the court, through to obtaining injunctions and ultimately securing the recovery of money or property from the franchisee or resolving issues arising out of termination of the franchise agreement, we will assist you throughout the process. Our team works closely with specialist franchising barristers where necessary.

Company secretarial and other corporate governance services

Our company secretarial team can assist with the incorporation of companies as well as ongoing services such as a registered office and/or company secretarial services.  All of these services are fixed fee services.  Our registered office service is basically a post forwarding service.  Statutory bodies will write to the registered office and our team will filter out all junk mail.  Our company secretarial service assists companies in the drafting and filing of basic documents such as board minutes and forms relating to the appointment or resignation of directors, any changes to a directors details, changes accounting filing dates, assistance with the new Register of Persons With Significant Control and drafting and filing of the Confirmation Statement, the document which has taken the place of the annual return.

Banking requirements and consumer credit issues

Our Banking and Finance Team has a first class reputation in corporate and retail lending, asset and real estate finance, restructuring and financial services regulation We have the strength and depth to provide a quality service to meet franchisors needs in all types of financing transactions.  The team comprises of over 20 specialist lawyers able to resource transactions from the simplest to the largest and most complex and we offer fast expert advice on all aspects of lending, security, product development and financial regulation. We also have a dedicated team who advise in depth on consumer credit issues, including authorisation, financial promotion, standard documentation and breaches/enforceability issues. Although a franchise arrangement in its simplest form is not a regulated activity, the franchisor may step into the regulatory framework when arrangements includes (but are not limited to) matters such as the deferment of payment by the franchisee for purchase of the franchise, where credit is provided by the franchisor to the franchisee for the start-up of the franchise, where the franchisor introduces lenders or when equipment is hired to the franchise. Our expertise in using the perimeter guidance together with our commercial understanding enables our team to identify solutions to avoid the regulatory perimeter or, if our client feels for commercial reasons it is absolutely necessary to cross into regulatory territory, we will advise how to carry on such activities in compliance with the FCA and CCA framework.

For further information please contact: