Franchisor: The first step is to ensure that your business is correctly set up.
If you are a sole trader, would it be sensible to incorporate as a Company giving you limited liability? Incorporating could also give you the opportunity to sell equity in the business (i.e. a future sale of shares). The company will have Intellectual Property that is to be licensed to a Franchisee. This will include the brand identity and business knowhow (most commonly included in a Franchise Manual). We can also connect with you with highly experienced patent lawyers who can assist in protecting your brand (Intellectual Property); from trademarking the name and image to litigating against anyone who infringes on the franchise’s Intellectual Property.
We can also advise a Franchisor on the appropriate corporate structure of a Franchisee.
Should you accept a Franchisee being a sole trade, a partnership or limited company? This is likely to differ based on the Franchise being sold; where the Franchisee is a company (Corporate Franchisee), then you should consider requiring an individual (Principal) being introduced as a party to the agreement. This gives you as the Franchisor additional protection, as there is a right of action against another party other than the Corporate Franchisee which has limited liability and, especially in its early stages, limited assets.
About HSR Law and how we can assist you with your franchising requirements
HSR Law has a dedicated Company and Commercial team comprising 5 fee earners who are ready to assist you with your franchising requirements. However, our clients come from the length a breadth of England and Wales.
We handle matters for both Franchisors and Franchisees, and our niche is acting for small to medium sized franchises and franchisees who anticipate their turnover to be less than £2m per franchise.
We have a dedicated team of 5 colleagues working within our Company and Commercial Team, who spend time to get to know you and your requirements so we can best advise accordingly.
We are small enough to care, but large enough to cope.
Your Franchisor – new franchisor Team
Our recent cases have included:
- Acting for the franchisees of a large property franchise looking to dispose of their territory and negotiating the terms with the Franchisor and the Buyer.
- A franchisee looking to acquire further territories from an existing franchisees and the most appropriate route to acquire the business.
- Selling a non-franchised business to a franchised business, which included a deferred payments subject to clawback.
- A sale of a Corporate Franchisee to an existing franchisee via a sale of the entire issued share capital. This included careful negotiation around the free cash within the business and working with the client’s accountant.