Franchise Agreements in Retail

Franchise agreements are used extensively within the retail sector. 

It is important to understand how these agreements work and what they will mean for the parties entering into them. 

A franchise agreement is a legally binding contract that establishes a relationship between a franchisor (the business owner) and a franchisee that outlines the terms and conditions of their business relationship. 

Essentially, under a franchise agreement, a franchisor provides a licence to the franchise (in return for a fee) to use its intellectual property, branding and business system. 

Typically, the agreement allows a franchisee to establish a franchise location and provides the right to use franchise-specific resources (for example, branding, business models, and supply sources).

The agreement will also provide a framework for the franchisor to maintain its intellectual property or branding and allow for the franchisee to benefit from a proven business concept.

The agreement also protects the rights of both parties if the relationship breaks down or if one party does not comply with the agreed terms.

Navigating your way through a franchise agreement can be a difficult and daunting experience, so please contact our retail specialists for support during this process.

Franchise agreements are negotiable, but the degree of which can vary depending on the type of agreement it is, and also who the agreement is being made between.

Franchisees will often aim to secure terms that enhance their profitability, whilst franchisors want to protect their brand integrity and retain control over the activities of the franchisee. 

Successful negotiations allow for open communication and collaborative approaches between both parties.

Any negotiations are usually made with the shared goal of creating a successful and mutually beneficial partnership between the franchisor and franchisee. 

Seeking legal advice to assist with this negotiation process is crucial to ensure that any adjustments are made in the interests of both the franchisor and the franchisee.