103-105 legal DSAP 29/10/07 17:31 Page 1
Investment Advice
The legal issues of
buying a franchise
When looking to acquire a franchise it is crucial that
you do your homework and carry out all the
relevant checks on the franchisor and the
concept itself, counsels Nicola Broadhurst
Before you sign
any franchise
T
he franchise agreement is probably the
most important document in the
transaction process as it is the legal irrelevant in
commitment, which is binding on both you and the context of
agreement
the franchisor. If after signing the contract you franchising. This
discover it is more onerous than you thought should also prove
check it
you cannot simply give up and walk away. more cost effective.
Invariably you will have to negotiate an exit A specialist would,
yourself and
with your franchisor, usually involving therefore, be able to
payment or ultimately seek redress advise on those areas that
have the
through the courts. are standard to all
Therefore, before you sign any franchise agreements and
agreement
franchise agreement you must those areas that may well be
ensure that you have checked it in breach of the bfa’s Code of
reviewed by a
yourself and had the agreement Ethics and should validly be
reviewed by a specialist challenged with
specialist
franchise lawyer, preferably the franchisor.
one who is affiliated to the
franchise
British Franchise NEGOTIABILITY
Association (bfa), as they Most franchise agreements are issued to
lawyer.
will have proven prospective franchisees as non-negotiable
franchise experience agreements. This is justified on the basis that
and be aware of the the franchisor is preserving uniformity in the
bfa’s code of ethics. network and not treating one franchisee more
A franchise favourably than another. This should not be
agreement is not a accepted at face value. If the agreement contains
standard commercial unethical provisions or does not reflect
agreement, it is usually non everything that has been promised to the
negotiable and one-sided being weighted heavily franchisee then this needs to be addressed, usually
in favour of the franchisor in order to protect the by way of a side letter to the agreement. The side
franchisor’s intellectual property. A specialist letter will vary the franchise agreement where
franchise lawyer recognises this fact, which applicable and have contractual force.
avoids issues being raised that a franchisor would
not be prepared to negotiate on and are
CONTINUED ON PAGE 104 >>>
©2007 The Franchise Magazine 103
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112  |  Page 113  |  Page 114  |  Page 115  |  Page 116  |  Page 117  |  Page 118  |  Page 119  |  Page 120  |  Page 121  |  Page 122  |  Page 123  |  Page 124  |  Page 125  |  Page 126  |  Page 127  |  Page 128  |  Page 129  |  Page 130  |  Page 131  |  Page 132  |  Page 133  |  Page 134  |  Page 135  |  Page 136  |  Page 137  |  Page 138  |  Page 139  |  Page 140  |  Page 141  |  Page 142  |  Page 143  |  Page 144  |  Page 145  |  Page 146  |  Page 147  |  Page 148  |  Page 149  |  Page 150  |  Page 151  |  Page 152  |  Page 153  |  Page 154  |  Page 155  |  Page 156