Entries by Hamilton Pratt

Franchise Agreement Renewals

The great majority of franchise agreements contain a renewal clause which allows franchisees to require their franchise agreements to be renewed. Usually, the only exceptions are those franchise agreements which are granted for twenty years or more. There are no rules concerning renewals, but the British Franchise Association has indicated that in relation to five […]

What is Franchising?

Franchising turnover in the UK in 2010 was £12.4 billion. In addition to that, over 521,000 jobs were attributable to franchising and there were over 890 different business format franchising systems available. Such figures prove that franchising is a great method for expanding businesses, but what is franchising? A franchise must have the following elements: […]

What do I need to know about my Franchisor?

Entering into a franchise is, or should be, an extremely exciting process. You may well have been an employee for many years and now this is the opportunity you have dreamt about of owning your own business with the reassurance of an experienced franchisor. You must not, however, let the excitement take over and you […]

How much disclosure regarding the accounts of the business can I expect from the franchisor before I commit any money?

Whilst you should not assume that this will automatically be provided, you should ask the franchisor for copies of its latest audited accounts and, where available, management accounts. Some franchisors may be reluctant to provide this information and should this be the case you can, and should, obtain a copy of the latest audited accounts, […]

What is the most important aspect of a franchise agreement?

The agreement needs to be fair! This may seem an odd thing to say because franchise agreements are the most one sided agreements – always in favour of the franchisor and not the franchisee – but franchisors must accept obligations which are enforceable and not vague obligations to provide assistance, guidance, and advice.   Further, franchisors […]

How safe is it to pay a deposit to a Franchisor?

Franchisors devote a great deal of time to the recruitment process and, during that process, they will provide confidential information to a prospective franchisee. Clearly franchisors do not want to do this if a franchisee is not “serious” about taking the franchise so franchisors very often ask prospective franchisees to pay a deposit of usually […]

How does a franchisor make money from its franchisee network?

In a nutshell, franchisors make money by having successful franchisees. Franchisors should not make money from their network by charging a high initial fee with a large profit element. The purpose of the initial fee is to reimburse the franchisor the very substantial costs of recruiting and training franchisees, providing the initial obligations to enable […]