One of the most successful business formats in North America is the franchise. It has become an extremely important form of business and many of the fastest growing businesses have been franchise systems. Many of the businesses we deal with are franchises or are parts of distribution networks. They range from the well known restaurant concepts and the sale of cars to lesser known home care, medical and garden care concepts.
Franchisor Services
As the franchisor of a system you have to be sure that you carefully define the obligations of the parties. We can assist you in ensuring that your agreement:
• protects your goodwill in the system,
• protects your trademark,
• deals with real estate and leasing issues,
• allows inspections, audits and the imposition of standards,
• includes termination and enforcement provisions,
• deals with the telephone numbers and listings,
• gives you the right to receive benefits from third parties servicing your franchisees, and
• allows you to recover the franchise business for your benefit.
Franchisee Agreements
A decision to acquire a licence to operate a franchise business or become a distributor and make the necessary capital expenditures is a very important one that should be undertaken with the benefit of legal advice. We can help you identify the questions you need to ask and provide the legal advice needed on many issues. The matters that need to be addressed include:
• the need to investigate the franchisor's business including its principals, experience and success,
• how the franchisor deals with its franchisees both in the initial stages of selecting them but also in the long run in terms of support and innovation,
• the nature of the interest you are acquiring,
• the nature and magnitude of the investment you will be making and whether you will be financing the business through third party loans,
• the related obligations you will be incurring especially in relation to leases of real estate and equipment,
• who supplies the goods and inventory that will be used or sold in the franchise business and on what basis it is supplied,
• how the relationship can be ended and what happens at the end of the relationship, including the nature and extent of any restrictive covenants or other conditions, and
• the contractual terms between the parties and in particular whether the franchisor's obligations are fully described and your obligations for royalties, advertising and other funds and initiation, termination, transfer and other fees.
Franchising Litigation
As with many contractual relationships disputes can arise between the Franchisor and Franchisee. Franchisees can become disenchanted with the franchise system leading to breakaways or encounter financial problems which result in the failure to pay royalties or adhere to system standards. Our lawyers can advise as to the best way to:
• enforce a franchise agreement,
• recover the franchise location and deal with the landlord,
• protect the telephone number for the business,
• terminate a franchise agreement,
• protect trademarks,
• obtain injunctive relief, and
• enforce a restrictive covenant.
Franchisors can breach their obligations under the franchise agreement or mislead franchisees with false information which can trigger rights in the franchisee to terminate the relationship or claim for damages. We can advise as to the best way to amicably conclude the relationship or pursue legal proceedings on your behalf if a consensual resolution is not possible. |
