Knights plc

This Practice Note highlights some of the key provisions in franchise agreements and in a franchise context that help reduce the risk of disputes arising between franchisor and franchisee.

This Practice Note examines the role and remit of the British Franchise Association (the BFA) in the franchise industry in the UK. It looks at the legislative and regulatory framework in the franchise industry, the membership criteria of the BFA, the BFA’s Code of Ethical Conduct, the complaints and appeals process of the BFA, the sanctions which the BFA can impose upon its members, and the relationship between the BFA and the European Franchise Federation.

This Practice Note examines the role and remit of the European Franchise Federation (EFF). It considers the legislative and regulatory framework of the European franchise industry, membership criteria of the EFF, the European Code of Ethics for franchisng, the complaints and appeals process of the EFF, sanctions which the EFF can impose upon its members, costs of membership of the EFF for franchisors and franchisees, and the relationship between the British Franchise Association and the EFF.

This Precedent franchise agreement—exclusive is for use when a franchisor wishes to appoint a franchisee to sell its goods or services in a particular territory on an exclusive basis. This Precedent is an exclusive franchise agreement meaning that the franchisor is restricted from appointing additional franchisees into the territory and is also restricted from operating in the territory itself. A franchise agreement is not a distributorship or agency; a franchisee (re)sells goods or services under a proven business method developed by the franchisor, and whose sales success is proven. The franchisee, like a distributor, is an independent trader who invests its own funds in the franchise. See also Franchise agreement—non-exclusive and Master franchise agreement.

This DEED OF Agreement is made on [insert date]Parties1[insert name][ of][ incorporated in[ England and Wales] under number [insert company number] whose registered office is at] [insert address] (the Franchisor); and2[insert name][ of][ incorporated in[ England and Wales] under number [insert company number] whose registered office is at] [insert address] (the Franchisee),each a party and together the parties.BACKGROUND(A)The Franchisor has developed the Method and the Business.(B)The Franchisor [has applied to register OR is the registered proprietor of OR owns OR has the right to sub-licence] the Trade Marks.(C)The Franchisor wishes to appoint the Franchisee to run the Franchise Business in the Territory.(D)The Franchisee wishes, and is able, to accept such appointment.THE PARTIES AGREE:1Definitions and interpretation1.1In this Agreement:Active Sales•has the meaning given in Article 8(7) of VABEO;Annual Sales Target•means, for each Year, the Turnover set out in the Business Plan;Business•means the business of [specify], developed by the Franchisor and operated using the Method;Business Day•means a day other than a Saturday, Sunday or bank or public holiday in England;Business Plan•means the business plan agreed by the parties and attached as Appendix 2;CMA

This Precedent franchise agreement—non-exclusive is for use when a franchisor wishes to appoint a franchisee to sell its goods or services in a particular territory on an exclusive basis. This Precedent is a non-exclusive franchise agreement meaning that the franchisor is able to appoint additional franchisees into the territory and may also operate in the territory itself. A franchise agreement is not a distributorship or agency; a franchisee (re)sells goods or services under a proven business method developed by the franchisor, and whose sales success is proven. The franchisee, like a distributor, is an independent trader who invests its own funds in the franchise. See also Franchise agreement—exclusive and Master franchise agreement.

This DEED OF Agreement is made on [insert date]Parties1[insert name][ of][ incorporated in[ England and Wales] under number [insert company number] whose registered office is at] [insert address] (the Franchisor); and2[insert name][ of][ incorporated in[ England and Wales] under number [insert company number] whose registered office is at] [insert address] (the Franchisee),each a party and together the parties.BACKGROUND(A)The Franchisor has developed the Method and the Business.(B)The Franchisor [has applied to register OR is the registered proprietor of OR owns OR has the right to sub-licence] the Trade Marks.(C)The Franchisor wishes to appoint the Franchisee to run the Franchise Business in the Territory.(D)The Franchisee wishes, and is able, to accept such appointment.THE PARTIES AGREE:1Definitions and interpretation1.1In this Agreement:Active Sales•has the meaning given in Article 8(7) of VABEO;Annual Sales Target•means, for each Year, the Turnover set out in the Business Plan;Business•means the business of [specify], developed by the Franchisor and operated using the Method;Business Day•means a day other than a Saturday, Sunday or bank or public holiday in England;Business Plan•means the business plan agreed by the parties and attached as Appendix 2;CMA

This Precedent is a franchise business sale agreement for use by an outgoing franchisee selling the business and assets of its existing franchise (the seller) to a new incoming franchisee (the buyer) and the principal franchisor. It is drafted from the perspective of the franchisor.

This Precedent letter of confirmation of legal advice is to be sent from the adviser of a franchisee to the adviser of a franchisor. It confirms that the franchisee (and the principal of the franchisee) has received legal advice in relation to the franchise agreement and in particular in relation to any onerous provisions of it.

This Precedent letter of waiver is to be sent from the franchisee to the franchisor. It confirms that the franchisee has not opted to receive legal advice in relation to the negotiation and execution of the franchise agreement and in particular in relation to seeking advice on any onerous provisions within it. The letter of waiver is executed as a deed.

This is a Checklist of issues for a franchisee to consider prior to committing to enter into a franchise agreement or purchase an existing franchise. Taking a franchise is often a substantial financial investment and long term commitment for a franchisee and it is important they fully understand what they are getting into.

This Checklist is for a franchise disclosure document or franchise verification documentation. It provides a list of the key elements for the franchisor to include within the franchise disclosure document or franchise verification documentation, to support its standing as a franchise business.

This is a Checklist for taking instructions from either a franchisor or franchisee in relation to a proposed franchise agreement.