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Franchising Your Business: The Support Service
One of the biggest practical differences between a simple distribution scheme and a fully fledged business format franchise is the extent of the initial and continuing support services offered by franchisors to franchisees.
Franchisors take on responsibility for product and service development, for national promotion and PR, for purchasing financial and administrative services, for quality control and national accounts, for network communications and discipline. The skills involved are not the same as those required by field managers in company owned networks and there is an investment involved in making sure the necessary support services can be delivered to your first franchisee as well as your fiftieth.
The extent of support offered varies according to the kind of business that the franchise is in and according to how it is structured. A job franchise network (where e.g., the franchisees do the drain cleaning) will offer extensive administrative and financial services to its franchisees. A management franchise (where the franchisees employ and manage) will not be so much involved in day to day administration but will be providing training to franchisees on (e.g.) recruiting and selecting staff amongst many other services related to supporting management functions.
You will also need to make sure that your franchised business is structured so that your franchisees need your services on a continuing basis and in consequence will want to go on paying you to belong to the network.
Again, professional advice at the outset could save you a great deal of money and trouble in the long run.
Franchising Your Business: The Agreement
Franchise agreements must be fair and comprehensive. They are not sales brochures and there is not one standard work that fits any business.
These days, a good agreement will stretch to forty or more pages and is just as much concerned to set out the obligations of you the franchisor as well as your rights. It is equally concerned to set out the rights of the franchisee as well as their obligations.
That does not mean that franchise agreements are an equal balance of rights and obligation between equal business partners. Franchisors are responsible for the network as a whole and that sometimes means acting against the interests of an individual franchisee for the greater good of the network. Franchise agreements have gone through more than twenty years of development to ensure that franchisors have the appropriate rights to do their job within a framework of fair and reasonable treatment for franchisees.
There are only a limited number of UK lawyers familiar with the complexity of franchise agreements, and only some of those have the necessary skills to advise a business on the best way to structure a franchise agreement.
In this area you must get fully experienced professional advice. Sources are available from the British Franchise Association.
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