Franchise Advice
Franchising: what should franchisees expect?
Specialist franchise solicitor Manzoor Ishani explains how it’s vital that prospective franchisees are able to determine a franchisor’s obligations
T
here was a time when franchise agreements contained a host of detailed obligations that the franchisor off ered to perform for its franchisees. These days,
when reviewing franchise agreements for clients, banks and so on, I am increasingly coming across clauses that deal with the franchisor’s obligations. These are fewer in number, more general in nature and short on detail as to exactly what it is that the franchisor will do for its franchisees. There are a number of theories as to why this is so; the more specifi c the obligations, the more demanding the franchisee will be, the greater the detail, the greater the infl exibility enjoyed by the franchisor. It is not so much the number of obligations, but rather their nature that is important – franchisees are now much better informed and confi dent about their rights and expectations than they were previously. Some of these theories are based on sound principles, others less so, while some are a poor attempt at thinly disguising a hidden agenda. All this is small comfort to prospective franchisees, who are eager to know what the industry norm is by which they can judge their particular franchisor. In determining the obligations of a franchisor, much depends on the nature of the business. The obligations that a franchisee should rightly expect from a franchisor of a fried chicken business are going to vary considerably from those expected of a franchisor of a retail confectionery or dry cleaning business. Nevertheless, almost all professional advisers and ethical franchisors would agree that there are certain franchisor obligations that are fundamental to ethical franchising, irrespective of the nature of the business.
Training
It is fundamental that franchisors train franchisees in how to operate the franchised business. This obligation must continue beyond initial training, so that franchisors are required to provide continuing and further training to franchisees during the period of the franchise agreement.
Protection and reputation Franchisees pay franchisors for the right to use their intellectual property, such as the trade name, trademarks, know- how, copyright and business system. Franchisors should do whatever they can to protect their intellectual property and should be under an obligation to continue protecting it by registering their ownership, and where necessary, taking court proceedings against infringers. A balance has to be struck between what is necessary, desirable or practicable in the interests of the franchisor, the franchisee and the franchised network as a whole. Nevertheless, franchise agreements should contain provisions relating to this, so that prospective franchisees can make an informed decision as to whether such provisions are acceptable to them or not.
Support
Crucial to any successful franchised operation is the level of support a franchisor gives to its franchisees. This, after all, is one of the things franchisees pay for. There should therefore be a positive obligation on the franchisor to provide such support as a franchisee may reasonably require so they can run their franchised business in accordance with the franchisor’s system. The level of support required will vary from one franchisee to another. Franchisors
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BusinessFranchise.com | November 2016
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