Franchise Agreements

Are you a business owner and want to start franchising, or do you want to purchase a franchise from an existing organization? Regardless, if you are entering a franchise relationship, you will need a franchise attorney to setup the franchise agreements and other legal documents. The franchise relationship between a franchisor and franchisee will mostly be controlled and governed by a franchise agreement. Depending on the franchisor or the type of franchise business, the franchise agreement may regulate all business aspects such as store signage, furniture and decor to where the shop must be located.

No franchise agreement is the same. How a franchise agreement is setup depends on the type of franchise being bought and sold. Many countries have specific laws on franchising and what is allowed in the franchise agreement. There will definitely be provisions in the franchise agreement that will have a direct impact on how you run your business.

Royalty Payments

These are payments that have to be made to the franchisor. The amount of the payment is normally based on the weekly or monthly income from sales of the franchisee’s business.

Franchise Location

The franchisor may choose the location of your store or require to approve the site selected by the franchisee. The process of relocating might be more complicated due to the franchisor’s involvement.

Franchise Design

The franchisor may require a franchisee’s outlet to look the same as all the other outlets which forms part of the franchise group. This includes the furniture, signage, menus and uniforms.

Franchise Products

The franchisee may not have control over the goods or services that are sold. This restriction guarantees that the franchise name, products and services remain identifiable by the public.

Franchise Operations

Franchise agreements should typically specify the manner and method of operations, business system requirements, suppliers, and advertising specifications.

Franchise Insurance

The franchisee may be required to obtain insurance for the business as specified in the agreement, including insurance against loss by fire and natural disaster, and liability coverage for any injuries suffered by customers on the franchise premises. The franchise agreement could specify the minimum amount of the insurance required.

Franchise Duration

Franchise agreements may be for fixed terms or a specified amount of years. Once the franchise agreement expires, the franchisor may offer the franchisee a renewal, however, in order to protect the interest of the franchisee it would be advisable that the franchisee negotiates a right to renew when signing the initial agreement.

More information about Franchise Law:

Franchising – Franchising means the licensing of a franchisor’s business model to a franchisee. The franchisor appoints franchisees to expand its business by means of separate and individual franchise outlets. The franchisor’s success will depend on the success of the franchisees as well.

Franchising in South Africa – When the franchisor grants licensing rights to a franchisee to use the franchise business system. The franchisor will remain the owner of all intellectual property rights surrounding the business system.

Franchise Operations Manual – A franchise operations manual is the primary document that governs the day to day franchise procedures and operational requirements. The manual should be specify in detail the procedures with which franchisees should comply in order to operate their franchise business.

Franchising Legal Advise – Franchise law is specialised and differs from other areas of law, thus you need find yourself an attorney that specialises in this specific type of law. Franchise attorneys represent the franchisor, as well as the franchisee. Smit & Van Wyk, Inc. specialist franchise attorneys  provide both franchisors and franchisees assistance and legal advice.

Franchise Attorneys – Esmari Jonker is an Attorney of the High Court of South Africa with more than 16 years experience with franchise agreements (franchise contracts), litigation and intellectual property. She acts on behalf of local as well as international clients in the franchise industry.

Buying a Franchise – Rather than starting your own business, you can purchase an established successful business franchise. Buying a franchise has it’s advantages and disadvantages, but it is at least a path to self employment. Before you invest, make sure you do a lot of investigating and preparation.

Starting a Franchise – A business that has set out its systems and procedures, and is trading profitably, may choose to start a franchise. Successful franchising is difficult but if you want to expand your business to its’ maximum size and profitability, you may wish to franchise your business. If you are the franchisor you may benefit from additional profits and you may retain control over your business system.

Franchise Agreements – Are you a business owner and want to start franchising, or do you want to purchase a franchise from an existing organization? Regardless, if you are entering a franchise relationship, you will need a franchise attorney to setup the franchise agreements and other legal documents. The franchise relationship between a franchisor and franchisee will mostly be controlled and governed by a franchise agreement.

Franchise Attorneys – How a franchise agreement is setup depends on the type of franchise. Each franchise agreement will have provisions that include royalty payments, franchise location, design, products, operations, insurance, and duration.

Franchise Agreements in South Africa – Principles like fixed pricing structures and the definition of exclusive franchisee territories are contrary to the provisions in the Competition Act. Similarly, principles like restrictive purchase conditions are contrary to the provisions in the Consumer Protection Act.

About the Franchise Agreement – A franchise agreement is in essence not defined in separate category of law, but is governed by existing law of contracts.  More specifically, a franchise agreement is a licence agreement whereby certain intellectual property is licensed by a franchisor to a franchisee.