Steer issue 20 March - Page 22



FRANCHISE
Figuring out the
FRANCHISE AGREEMENT
It is critical for you as a franchisee to understand the
essence of your Franchise Agreement – not only because
it is a contract but more importantly it lays the ground
rules for the relationship between franchisee and
franchisor.
To me a successful franchise is a marriage that demands
that the franchisor and the franchisee work together as
one with a common objective of business success. Trust,
respect and a shared vision all help to create a common
bond between the two parties. However, to ensure such
mutuality you need to base it – from the beginning – on
the clear knowledge and understanding of each party’s
specific responsibilities.
This is where the franchise agreement comes in. It
sets out in detail the contractual terms, conditions and
obligations of both the franchisor and the franchisee.
Basically, it sets the rules of the game and it is also the
basis of the formal relationship between the two parties.
A franchise agreement has three fundamental
objectives: Accurately set out the terms and conditions
of the arrangement between franchisor and franchisee;
protect the franchisor’s intellectual-property rights and
specify the ground rules for operating the franchise units.
Both sides need to follow the rules: if they do so then it
will be a happy and successful relationship. Problems only
arise when people break them.
The franchise agreement is often quite lengthy and
will cover a whole plethora of conditions surrounding
the running of the franchise. Of course, as with most
contracts, in a good franchise system people seldom refer
to the franchise agreement until this period is coming
to an end. As a franchisee, you need to ensure that you
have both enough time to reap adequate reward for your
efforts and to enable you to sell on a valuable capital
asset.
22 STEER YOUR BUSINESS
The Franchise Agreement will have an end date BUT
often franchise agreements will provide an option to renew
– and certainly with The Bardon Group companies we
provide an option to renew with no additional franchise fee
payable.
Franchises work because everybody rows the boat in
the same direction and every franchisee has the same
opportunities, rights and obligations. Every franchisee
should sign the same franchise agreement and you should
be cautious of the franchisor who is willing to change
theirs simply to suit the needs of prospective franchisees.
If you and your solicitor – who must be experienced
in franchising matters – cannot accept the franchisor’s
standard agreement, then you should look elsewhere.
Ultimately, the magic of franchising is that it combines
local knowledge, drive, ambition and individual skills with
a proven business system, ongoing corporate support
and professional guidance to hopefully create a successful
business venture for both parties.
The Franchise Agreement sums up the elements
required to make this magic work. But for all that it lays
down the rules, provide the parameters and document
the means of working together, it cannot detail the most
important attributes of a successful relationship – attitude,
honesty, integrity.
i
Nigel
Topliss
Nigel Toplis is managing director of
The Bardon Group. Contact him on
Tel: 01530 513300 or
Email: info@thebardongroup.co.uk

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