What is a franchise agreement?


Explaining what a franchise agreement is...

“When you buy a franchise you’re effectively buying the rights to run a business. And you need to have an agreement that will set out the rules that are going to govern the way you run that business and what happens in the longer term as well.”

On whether you should take legal advice before signing the agreement...

“Most definitely. The franchise contract is a complex document because it pulls together various aspects of running the business.

“But it also has within the contract certain rights that you need protected as an operator of the franchise business. You need to know that the brand is going to remain as valuable as on the day that you bought it.

The franchise agreement may be legal because it has been drafted by a solicitor, but that doesn’t necessarily make it ethical – and that’s when the British Franchise Association comes in

Mansoor Ishani, franchising lawyer at Sherrards Solicitors

“The franchise agreement may be legal because it has been drafted by a solicitor, but that doesn’t necessarily make it ethical – and that’s when the British Franchise Association comes in. They have a code of ethics and ethical franchisors with abide by this.

“The purpose of the code of ethics is to make sure franchisees don’t get ripped off and agreements don’t contain hidden clauses that could prove to be very expensive for the franchise buyer.”

On what to expect from franchise solicitors...

“Most solicitors – and you do have to go to a solicitor that specialises in franchising – will give you a quote from between £350 plus VAT to maybe £700. And for that you would expect the solicitor to read the agreement, understand the agreement, and explain it to you.”

 

About The Author

Marcus Markou Chairman
Marcus co-founded Dynamis Ltd with his brother Andrew. He launched his first magazine at University and BusinessesForSale.com in 1996. He trained at LAMDA as actor in 1999 and in 2012, he wrote and directed UK indie movie hit Papadopoulos & Sons which he also self distributed.

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