Our Service

To give your new venture the greatest chance of success, it is important that you get the right advice and assistance at the outset - whether you have a successful business model which is appropriate for franchising or an idea for a pilot scheme that you would like to franchise in the long term.

Our experienced commercial solicitors can draft and advise on:

  • Licence agreements (for pilot schemes) –are a good way for franchisors to test the market and operate quasi-franchises whilst establishing a franchise network.
  • Franchise agreements and renewals – franchise agreements form the foundations of a franchise network. They set out the terms you are engaging with a third party. Your franchise agreement must protect your intellectual property rights, confidential information and method of operation as these will all be provided to franchisees for them to run their franchise business. 
  • Commitment deeds – such agreements tend to be put in place where a franchisor has found an appropriate franchisee and but where the parties may wish to delay entering into a franchise agreement whilst appropriate business premises for the franchise business to operate from are secured.
  • Confidentiality agreements – these are commonly used to ensure the franchisor’s confidential information that may be disclosed to a potential franchisee as part of the preliminary discussions but before the parties have entered into a formal franchise agreement.
  • Intellectual property licences – these are licences which grant a third party the right to use certain intellectual property rights belonging to another (usually the Franchisors or its parent company) for certain purposes (i.e. the operation, marketing and promotion of the franchisee’s business).

We can also provide ongoing updating services to keep your documentation up to date with any changes to legislation, case law and the BFA’s Code of Ethical Conduct.

As we are a full-service offering, our commercial team works closely with and draws on the expertise of the solicitors from our Commercial Property Team, Employment Team and our Dispute Resolution Team to ensure you have all the relevant advice and assistance for your franchise operation, from sourcing premises to engaging employees and handling potential disputes with franchisees. Our specialists can:

  • Review intellectual property portfolios and advise on the steps to take to protect your intellectual property.
  • Advise on the most appropriate corporate structure for your franchise operation.
  • Advise and assist with equity finance-raising exercises or debt finance.
  • Assist with the purchase or leasing of commercial premises, including advising on and drafting head-leases and sub-leases.
  • Advise on business processes, procedures data protection, employment contracts, handbooks and policies.

Our experience

We have a wide range of experience in assisting clients with franchises of all sizes:

  • Advising an interactive experienced entertainment provider and preparing its international franchise agreement;
  • Advising and assisting a utility services provider and preparing a master franchise agreement for the appointment of a Master Franchisee responsible for granting franchises within the UK and preparing a standard franchise agreement for the Master Franchisee to enter into with the franchisee;
  • Advising and assisting a restaurant franchise business in the preparation of its franchise agreements;
  • Advising and assisting an events franchise with the preparation and execution of its franchise agreements, updating the same as the business has developed and diversified, including drafting software licensing terms for the implementation of software within the franchisees’ businesses.

FAQs for Franchisors

What is franchising?

The trend for businesses to choose franchising as a cost-effective means of expansion has grown considerably over the last 30 years. Once mostly limited to fast-food restaurants and hotels, franchising has expanded into all business sectors.

The term ‘franchising’ has been used to describe many different forms of business relationships, including licensing, distributor agreements and agency arrangements. In its most familiar sense, the term ‘franchise’ has arisen from the development of what is called ‘business format franchising’. Business format franchising is the granting of a licence by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade as their own businesses under the brand of the franchisor, following a proven business model. The franchisee also receives a package comprising all the elements necessary to train individuals in the operation and day-day workings of the business. 

Do you have something to franchise?

A successful business does not necessarily mean that multiple outlets will be successful. You should carefully research the market and consider running a pilot scheme before granting numerous franchises. We recommend you also consider the shelf life of your business, as most franchises are granted for five to ten year periods and have options to renew for a further term of a similar duration.

Do you have the time and resources to franchise?

Franchising part of your business is a separate undertaking from the day-to-day operation of your business. As a franchisor, you will usually have the following minimum obligations:

  • Training - You will usually provide initial training to the franchisee on the grant of a new franchise, and ongoing training may be required depending on the nature of the franchise.
  • Marketing - Although the franchisee may be required to market their franchise locally, the franchisor is usually responsible for the national marketing on behalf of its network of franchises.
  • Ongoing support and assistance - The attractive part of franchising to most prospective franchisees is that franchisors provide guidance, support and assistance throughout the term of the agreement. The Franchisor will usually have been trading for some time prior to deciding to franchise and therefore has invaluable experience in the potential pitfalls of operating a new business and, more importantly, the franchised business itself.

What are the key elements to a franchise?

Typically, a franchise will have the following key elements:

  • The franchisor allows the franchisee to use a name which is associated with the franchisor;
  • The franchisee operates his business in accordance with the franchisor’s concept and under the franchisor’s trade name or trade mark so that to the outside world, the franchisee is the franchisor;
  • The franchisor exercises continuing quality control over the franchisee;
  • The franchisor provides ongoing assistance to the franchisee; and
  • The franchisee periodically has to make payments to the franchisor.

Why should I consider franchising?

The main advantages of a franchise are:

  • Franchising offers the opportunity to secure distribution for products or services faster than would be the case if the franchisor had to train up its own employees and develop its own internal marketing, sales and distribution organisation;
  • The use of a franchisee’s capital will facilitate the expansion of a network more quickly than would be the case if the franchisor had to find the funds itself;
  • Many companies involved in the supply of goods or services seek to motivate their employees by linking their remuneration to sales. Franchising takes this one step further by linking the franchisee’s financial well-being to the success of the franchisor’s business;
  • With its increased purchasing power and potentially reduced overheads, a franchisor may be able to increase the profitability of small units.

What are the disadvantages to franchising?

  • Loss of control. While the franchise agreement will impose substantial restrictions on franchisees, it is important to remember that franchisees are independent third parties who will be given access to the franchisor's confidential information and business operations and will become trained in how to operate the franchisor’s business. Therefore if the franchise agreement does not contain appropriate restrictions on franchisees’ including following the termination of the franchise agreement, they could easily operate a competing business to the franchisor.  Depending on the nature and length of post-termination provisions they can run the risk of being unenforceable against a franchisee;
  • Part of the franchisor’s profit element is used in supporting an additional entity, the franchisee, in the distribution chain;
  • The skills required to control franchisees and provide support are different from those involved in operating a business through employees.

How should I structure my franchise?

An important point for would-be franchisors to bear in mind is that the operation of their own business should be treated separately from the operation of the business that is intended to be franchised. The structure of the arrangements will need to be considered in conjunction with taxation advice (relating to the UK and other jurisdictions where the franchise will operate), accounting advice in terms of formulating a financial model that works for all parties and legal advice in connection with the contractual documentation itself. A badly planned franchise operation can have severely detrimental effects on a business.

Is franchising the most suitable solution for you?

You should identify what you are trying to achieve with your proposed business arrangement. Different agreements will create different rights and obligations on the parties to them:

  • Franchising grants a licence to the Franchisee to use the Franchisor’s business format, know-how and intellectual property to operate a business under the Franchisor’s trade name.
  • Agency arrangements permit the agent to act on your behalf to market your business and make introductions to new customers or to enter into contracts directly with new customers.
  • Licences will grant specific, limited rights to a third party.

You can view more information on Agency and Distribution here.

What employment considerations are there when starting a franchise?

An important factor to consider when franchising your business is whether you require any additional staff to undertake specific roles in the franchise business.

Our Employment Team can provide advice and assistance on all matters relating to employment law, including drafting any necessary contracts of employment, company procedures, policies and handbooks.

You may also wish to consider whether such documents should form the standard basis of all such similar contracts and policies to be rolled out throughout your franchisees’ businesses.

How does international franchising work?

Franchising in the UK is becoming increasingly more international in its scope. There are essentially five ways in which a business can expand overseas using the franchise method:

  • A franchisor grants franchises directly to franchisees in the target country;
  • A franchisor sets up a subsidiary or a branch operation in the target country and that subsidiary or branch acts as the franchisor;
  • A joint venture is set up between the franchisor and a resident of the target country. The joint venture will act as the franchisor in the target country;
  • The franchisor grants a master franchise agreement. The master franchisor is given an exclusive right to operate and grant franchises within a territory. It undertakes to appoint franchisees in the territory based on the franchise agreements stipulated by the franchisor;
  • The franchisor grants a master development agreement. The master developer has no right to sub-franchise but is obliged to operate outlets itself.

What is the BFA?

The BFA is the original and largest not-for-profit trade association for franchising in the UK, who influence standards and legislation across Europe.

Whether you are an existing franchisor or a new franchisor, you should consider whether you wish to become a member of the British Franchise Association (BFA).

Please follow the link to the BFA’s website for details of membership benefits and the criteria for membership.

Meet Our Specialists

Home-grown or recruited from national, regional or City firms. Our specialists are experts in their fields and respected by their peers.

Carla Murray

Carla Murray

Carla is a Partner and Head of our Commercial Team

Andrew Brown

Andrew Brown

Andrew is a Partner in our Corporate Commercial Team

Richard Meehan

Richard Meehan

Richard is a Senior Associate in our Commercial Team

Joanna Colgan

Joanna Colgan

Joanna is a Solicitor in our Commercial Team

Olivia Whittaker

Olivia Whittaker

Olivia is a Trainee Solicitor within our Commercial Team

Contact Us

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0161 941 4000