Are Franchising Agreements a good tool to help grow your business?

Franchising Agreements are not right for every business. However, it is useful to know what they are and when it may be appropriate to consider them further to help your business grow, either within the UK or overseas.

What is a Franchising Agreement?

Think McDonalds. A franchising agreement is a contractual arrangement where one party, the franchisor, grants another party, the franchisee, the right to distribute the franchisor’s products or services using the franchisor’s established brand, business methods, processes, technology, and systems in exchange for fees or royalties. This relationship involves the franchisor providing a proven business concept, brand recognition, training, ongoing support, and access to marketing materials and resources.

In return, the franchisee agrees to follow the franchisor’s established business methods, adhere to brand standards, and pay the agreed fees or royalties

Do I need a Franchising Agreement for my business?

In order to maximise the benefit to your business, it is important that the ownership of the brand is considered as carefully as the products and services you sell when negotiating contractual terms in franchising, licensing or distribution arrangements.

Often these rights are dealt with as an afterthought. However, by securing the trade mark rights in a brand, the ownership of that brand may become a matter of dispute and end up costing you your rights to use it.

Trade marks are important assets that add value to any business. This value should be recognised, and if nothing else, clauses should be included in contracts to ensure that the benefit to each is properly distributed. This means:

• identifying what rights exist and in whom those rights belong;
• protecting those rights by way of trade mark registrations and contractual terms;
• exploiting those rights by cross-merchandising and licensing;
• enforcing those rights against unauthorised users (infringers).

Trade marks are valuable assets, the ownership of which can increase the value of and opportunities for your business, whether you are a restaurant, an appliance manufacturer or a an upcoming chef. Registering your trade marks is an economical way of protecting your company’s brand names, logos and domain names from use by others and making sure you can use it to its maximum potential.

If you would like to discuss if franchising could be the correct route for your business, please feel free to contact us.