Franchise Consultant What is a franchise agreement?

by Joel Bissitt

Franchise Agreements
As a Franchisee, what terms would you expect to see?
It may come as a surprise that there is no legislation specific to franchising in the United Kingdom. As a consequence a franchisor is at liberty to strike whatever bargain it wishes with its franchisees. While that bargain will be subject to common law principles and the plethora of existing legislation governing commercial relationships, it is the franchise agreement itself that will set out the terms of the relationship between the parties. Such agreements are always heavily weighted in favour of the franchisor, (and this is necessary to protect its interests) but it is reasonable to expect the agreement to be fair to the franchisee as well.
As a franchisee you should expect the franchisor's standard franchise agreement to contain the following provisions:
A fixed term - the length of term varies from franchise to franchise and is often related to the level of the initial purchase price and/or the level of fees payable
A right to renew the term, which will be subject to certain conditions being met. It will be important to ensure the right to renew is not lost due to any trivial breaches of the agreement. If the franchisor imposes minimum performance targets, consider whether these are appropriate, especially if based on the performance of other franchisees
A clearly identified territory and the rights connected with that territory e.g. is it exclusive and does the franchisor, or other franchisees, have rights to operate in the territory in certain circumstances?
A right to use the franchisor's intellectual property, that is, the franchisor's name, brand and know how and a warranty from the franchisor that it is entitled to licence such intellectual property
Confirmation that the franchisor has taken appropriate steps to secure its intellectual property to protect the brand and prevent infringement of its rights
Obligations on the franchisor to provide training, to assist with the business set up, to assist in identifying the right location of premises, to supply or identify suppliers for equipment and stock, to provide ongoing support
A right to sell the franchise in the company owning the franchise business. This right will be subject to certain conditions, which will need to be checked to ensure they are reasonable and will not unreasonably affect the right of sale
A contingency plan that would deal with the situation should the franchisee become ill or die. Bear in mind that your family or personal representatives will want rights to either sell the business or take it over
These are just a handful of the many issues that franchisees are advised to check in their franchise agreement. The issues can be complex and overlap with other provisions of the agreement so legal advice from a specialist is indispensable. Franchise UK work in partnership with franchise law experts Birkett Long Solicitors to give potential franchisee's and franchisor's help and guidance with franchise agreements.
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http://www.franchise-uk.co.uk Franchise UK 5 High Street Seaford East Sussex BN25 1PE Tel: 0800 019 9661 Franchise UK

About the Author
http://www.franchise-uk.co.uk Franchise UK 5 High Street Seaford East Sussex BN25 1PE Tel: 0800 019 9661 Franchise UK
Burgers and Bulldozers: New Franchise Roundup  by Jamie Davis

With hundreds of new franchise concepts being started every year, it is nearly impossible to keep track of the freshest ideas. Here is an update of two new franchises and how they have fared in their first several months of franchising.
The Counter - No, this isn't just another fast food hamburger joint. Besides serving hamburgers, The Counter has as much in common with your local McDonalds or Wendy's as the World Cup has to do with your child's weekend soccer game. First opened in Santa Monica in 2003, this trendy update to the classic burger joint serves its burgers with any combination of 10 cheeses, 26 toppings, and 17 sauces. So, go ahead and order that Danish Bleu Cheese Burger topped with dried cranberries and a ginger soy glaze you always wanted.
Since 2003, The Counter has received the type of press that most companies can only dream about. After being listed as one of the top 20 burgers in the country by GQ, the holy grail of endorsers, The Oprah Winfrey Show, named it the "Best Burger in the USA." (An aside on the power of the O-nod, sales jumped from $44,000/mo to $245,000/mo after the endorsement)
With all of this success, The Counter did the only logical next step and began selling franchises in early 2006 with a $40,000 franchise fee and 6% royalty.
So how is it going? The company has already inked agreements for 60 restaurants in California alone. Next up is expansion into Florida, New York, Arizona and Nevada followed by the rest of the country. With long range projections of only 400 to 600 units, The Counter is well on its way to franchising stardom.
EQUIPRO - If Santa Monica and The Counter just seem too trendy and hip, this light equipment repair franchise from Wisconsin surely won't. EQUIPRO, a subsidiary of Wacker Corporation began providing repair service to the light construction equipment industry in 2003. At the same time that the light equipment market is growing at nearly ten percent per year, many large equipment dealers have been cutting back on service support. In response to these trends, EQUIPRO began to build out its network of service centers.
EQUIPRO focuses on providing service for the following manufacturers: ICS, MI-T-M, MK Diamond, Sullair, and Wacker. The franchises are also full-service dealers for Honda, Briggs & Stratton, Robin/Subaru, Wacker and Kohler engines.
For each franchise, the company hires a Metro Service Specialist (MSS). The MSS is an employee of EQUIPRO, Inc. hired on behalf of the franchisee to develop service sales and act as a liaison for EQUIPRO's OEM partners in the local market. The responsibilities of the MSS include effectively calling on contractor offices and jobsites, equipment and rental dealers, as well as national accounts to promote solutions for equipment repair and parts. In addition, EQUIPRO provides professional training on business operations and technical details both in the classroom and on-site.
Franchising since June 2005, new franchisees can expect to invest between $145,000 and $350,000. EQUIPRO has opened 12 service centers and plans on opening 33 units by the end of 2006 and 150 in the next seven years.
About the Author
Jamie is the founder of SmarterFranchise. The leading source for franchise research, news and community. He is a previous owner of a major franchise and has a background in finance, investments and start-up businesses.