When you franchise your business, you - the franchisor - enter into a legal agreement with the franchisee. A clear, written contract known as the franchise agreement is essential.
The franchise agreement sets out what rights and obligations you each have. Key issues include:
- what geographical location the franchisee can operate in and whether they have exclusive rights in that location
- what rights the franchisee has to use your intellectual property - eg your trade marks
- what restrictions there are on what the franchisee can do
- what fees the franchisee will pay
- how you will support and train the franchisee initially
- what continuing support you will provide - eg national marketing campaigns or administrative support
- how long the franchise lasts and what happens at the end of the term
- what happens if either of you wants to end the agreement to an end or if you wnat to sell your business
Agreements tend to be in favour of the franchisor. However, if the agreement is too one-sided in the franchisor's favour, it will be difficult to attract potential franchisees.
Seek legal advice
Franchise agreements involve complex legal issues. You should take advice from a solicitor with franchising expertise. Search for a legal advisor. You can also search for a solicitor on the Law Society of Northern Ireland website.