Franchising is a popular business model.
It allows you, as a business owner, to operate
under the established brand of another business
and to sell its products and services for a
specified time.
Before you decide if franchising
is the best business model for you, it is
important to carefully consider what you are
agreeing to when you sign on the dotted line.
I’m John Gallagher from Argon Law and I
would like to talk about franchising and some
of the ongoing responsibilities you should
be aware of before you make the decision to
become a franchisee.
Firstly, most franchisees will need to lease
premises in which to operate.
Before signing a lease, you need to make sure
that you understand your rights and obligations.
These include things like ongoing payments
under the Lease, when you can be required
by the Landlord to refurbish the premises
and what your obligations are at the end of
the lease.
You should also ensure that the dates of your
lease line up with the start and end of your
franchise agreement.
Secondly, you should understand if a marketing
fund will be established by the franchisor
and what the ongoing contributions are to
that marketing fund.
These are often payable for the term of the
franchise and determined as a percentage of
turnover.
Thirdly, you should carefully review your
franchise agreement to understand when a franchisor
may require you to update branding, your shop
fit out or even site-relocation.
Franchisors often set minimum standards of
performance to be maintained during the term
of the agreement.
You should be aware of the consequences if
you fail to meet these obligations.
Before entering into a franchise agreement
you should seek as much information as possible
and get professional advice.
If you would like more information about franchising
please visit our website or give us a call.
