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How can we help?

In some cases, you may wish to expand your business, but you do not want to achieve that growth yourself. In other circumstances, you may want to start a business, wishing the relative security of a tried-and tested commercial ‘formula’. In either case, your solution may be a franchise: in the first, you would be a franchisor; in the second, a franchisee.

Franchise Agreement

A franchise relationship should be governed by a Franchise Agreement, covering, at least, the following:

  • The nature of the franchise / need for compliance
  • Territory of the franchise, i.e. the area it covers
  • The extent of the initial payment
  • To what does initial payment entitle the franchisee
  • The split of the initial payment split (e.g. fee? advertising? etc.)
  • Franchisee’s liability for royalty payments?
  • Minimum Guarantees, if relevant
  • Intellectual Property (“IP”) issues (please see also our IP section)
  • Conditions for termination
  • That the franchisee is satisfied with the elements the franchisor contracts to provide
  • The premises
  • How extensive the right of audit by the franchisor is
  • The position after the initial period of the franchise / transfer of the business
  • Restrictive covenants, i.e. restrictions after the franchise is ended


Advantages of a Franchise

  • Franchisee has no requirement to develop the business concept
  • Despite its costs, franchising gives a recognised ‘brand’ (name & logo) from day one
  • Training, strategy and methods are tried-and-tested – so the start-up risk is lower
  • Franchisee’s advertising forms part of a much larger campaign than he / she could afford
  • The up-front financial commitment results in higher franchisee motivation
  • Franchisee may be able to gain from franchisor’s bulk buying potential (e.g. computers)
  • Probable, on-going guidance from the franchisor – compared with a stand-alone operation

Disadvantages of a Franchise

  • High, initial expenditure before franchisee receives any income stream
  • Non-returnable, monthly payments are required – even if business is insufficient / nil
  • Franchisee finances the franchisor’s market growth (fine, provided franchise has income)
  • Franchisor may have a ‘take it / leave it’ attitude to contract changes asked by franchisee
  • The franchise business never truly belongs to the franchisee
  • If contract terminates, franchisee is time-barred from similar enterprise, in same area

If you feel that a franchise is the right business model for your aims, we would be delighted to assist you. Please contact enquiries@wdavies.com

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