negotiating franchise agreement

8/7/2019 Negotiating Franchise agreement

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NEGOTIATING FRANCHISE

AGREEMENTMartin Belan



TABLE OF CONTENTS :

1. Definition and types of Franchising

2. Main characteristics of the Franchise

3. Structure and content of Franchise

4. Franchise Agreement

5. What each party seeks in Franchise agreement

6. Why is Franchising becoming so popular?



DEFINITION:

Franchise Agreement: Legal agreement,document signed between two parties (franchisor,

franchisee) from which an agreed duties,

responsibilities and expectations result for both

Franchising: the practice of using another firm's

successful business model

TYPES OF FRANCHISING:

Job/Service : cosmetic salons, hairdressers

Property/Product: restaurants, retails, butiques

Investment: Hotels, Car rent



MAIN CHARACTERISTICS OF THE

FRANCHISE

Registered Trademark

Standardized franchise unit

Franchise agreement

Franchise Manual (know-how)

Territorial exclusivity

Support of the franchisee

Franchisee is a legal and accounting independent

entity



STRUCTURE AND CONTENT OF FRANCHISE

Franchisor gives to the Franchisee:

�Right to use trademark

�Know-how

�Overall design and look

�Training, Experiences, Consultancy

Franchisee gives to the Franchisor:

�Start-up fee

�

Royalty fee (if It·s part of an agreement)�Advertising fee if it·s part of an

agreement



FRANCHISE A GREEMENT

No exact pattern

It is not regulated in Commercial Code or Civil

code

The driving force is a balanced partnership

Every F.A. is different due to different conditions



WHAT EACH PARTY SEEKS IN F.

AGREEMENT

Franchisee:

training the franchisee and his staff

supply goods and / or services

responsibility for advertising, marketing and

promotions

assistance with the location and acquirement of the

property and conversion to a franchised outlet

assistance with the set up in business

improvement, enhancement and development of the

business system

provision of certain support management and possibly

accounting services

Protection from any trademark infringement by third-

parties



WHAT EACH PARTY SEEKS IN F.

A GREEMEN

Franchisor:

Monitoring of the performance of the franchisee

Protection from unfair competition

Protection of the Franchisors intellectualproperty

Impose obligations and restrictions on the

franchisee with regard to the exercise of the

rights granted by him to the franchisee



WHY IS FRANCHISING BECOMING SO

POPULAR?

Benefits to the Franchisor:

Competitive advantage-faster expansion, stable

and faster sales, more franchisee·s better position

on the market Cut the costs and risks-less administrative

personal

Benefits of the Franchisee:

Better relationship with the supplier Proven business model means lower risk of failer

Better access to loans, leasing and insurance



THANK YOU FOR YOUR ATTENTION

negotiating franchise agreement

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