Franchising is a system whereby a company or business (the franchisor) with a proven brand or model for doing business authorises another person (the franchisee) to use its brand name, trademarks or business methods, in return for a fee.

The two businesses will remain entirely separate, and the franchisee will not usually acquire any permanent right to use the trade marks or business methods which are the subject of the franchise.

The franchisee's rights will only last for as long as the franchise remains in force.

Some of the best known chains of shops and restaurants are not a single business, but are in fact a collection of separate franchises.

Franchisees will generally be given a specific location territory or list of clients which they are allowed to exploit. This will often be exclusive, so that no other franchisee can be appointed over the same potential customer base. The subject of the franchise can be broad, ranging for the simple right to use a trading name, through to all the materials required to run the business, including stationery, packaging materials, staff and management handbooks and furnishings. The terms of the franchise may impose only limited guidance on how the franchisee is to run his business, or may impose rigid rules on how the business must be operated.

The fees chargeable by the franchisor can be a fixed annual fee, a percentage of turnover or profit, or a combination of the two.

Franchises are often used by foreign businesses wishing to start up in a new jurisdiction for the first time. By appointing franchisees in the new country for a limited time, the franchisor can establish a name for their business in that country without having to incur the cost and risk of establishing full presence in the country.

We have extensive experience and expertise in drafting, negotiating and advising on franchise agreements, for franchisors and franchisees. We take a realistic and commercial approach to a client's needs, always ensuring that we understand the commercial needs of the new business, in order to tailor the advice and documents to best fit the client's requirements