Franchise agreement

Restaurant, cafe or other food retail
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Document overview

This is a franchising agreement for a restaurant, cafe or other food retail business. It not only protects the rights of the franchisor, but is also fair to franchisees. Either or both parties can be based in the UK or any other country.
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  • England & Wales
  • Scotland
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  • Length:29 pages (9400 words)
  • Available in:
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About this agreement

This agreement covers an enormous number of matters, both legal and commercial in nature.

It is comprehensive enough to be used by the largest multinational restaurant chains. However, most users are likely to be smaller businesses, using franchising for the first time as a means of expanding. Regardless of the size of your network, this document should give you an ideal basis from which to craft an agreement that not only protects your rights as a franchisor, but which also impresses prospective franchisees.

We would expect this document to be used by a solicitor or other franchise advisor. However, because the key to drawing a good franchising agreement relies on knowing the nuts and bolts of how the business works (rather than knowing complicated law), a business owner could also use it with ease. Use of plain English makes every sentence clear.

Should you be buying an agreement from an on-line retailer?

The advice from the largest association of franchisors in the UK, the British Franchising Association (the bfa) is that you shouldn’t use an advisor who isn’t a paid subscriber to their association. That advice extends to agreements bought from online retailers.

We take issue with this advice because it isn't impartial. The trade association is comprised of experienced and knowledgeable people, but it is a private company, commercially operated to promote and to protect the financial interests of its subscribers.

There is no additional qualification required to practice franchise law, just as there isn’t to being able to draw a lease. Commercial experience is the important quality to seek.

When it comes to selecting an agreement from an online retailer, we suggest that you look at templates from several different suppliers in order to evaluate which one is most comprehensive and suits you best.

Templates are not expensive compared to the cost of a solicitor's time and the benefit to your business of getting your arrangement right is enormous. Bear in mind that a short document, regardless of where it is bought, is unlikely to protect you sufficiently, not because the law relating to franchising is overwhelmingly complex, but rather because the practical considerations of how the arrangement will work require more than a few pages to record.

The law in this document

There are no specific laws or regulation for franchising. The deal is governed by common law. That gives you great freedom in structuring the arrangement in the best way for you and your franchisees. You can set the rules as you like. However, your prospective franchisees and their advisors will look carefully at your proposed agreement.

That means that the agreement becomes very important in recording the rights and obligations of both sides. It should reflect accurately and in detail the terms agreed. The more comprehensive it is, the less likely there are to be misunderstandings and disputes later on.

In research on franchises, you may find mention of European law set out in the Treaty on the Functioning of the European Union by Regulation 330/2010 and Vertical Agreements Block Exemption Rules. The law was drawn to catch pyramid selling and most vertical arrangements such as franchises are excluded from it. Provided that this agreement is used for a real franchise operation, this law should not be relevant.

The bfa promotes ethical franchising. We agree with this, not as a matter of philosophy but because a successful franchisor is one who helps his franchisees to create profitable businesses while he expands his own. Your agreement has to form the basis of a sound and profitable deal for both sides.

When to use this document

This agreement has been drawn for businesses in the restaurant and food retails industry.

Whether the food is hot or cold, and whether it is consumed on-site or taken-away does not matter to this agreement.

Your business might be:

  • a cafe or restaurant chain

  • a network of take away or fast food outlets such as fish and chip shops or pizzerias

  • mobile food outlets

  • market stalls

A business of any size could use this agreement, but we assume that it will be small or medium sized, perhaps with several established locations already.

The franchisor may be new to franchising, or may be looking to extend into the UK.

The franchise territory can be of any size, from part of a town to a continent. Generally, it is more advantageous to the franchisor to keep the area small and grant licenses to operate in additional areas to the same franchisee later. This agreement can be used to grant territory outside the UK.

The agreement does not cover ownership and lease of property (premises) by the franchisor. It assumes that the franchisee will own or let the premises using a separate lease (such as this one) either from the franchisor or someone else.

We have another agreement if you are retailing rather than serving food.

Features and benefits

We have given the buyer of this document a large degree of control over what the franchisor will give and what the franchisee will do in return.

We have included the usual provisions such as:

  • use of trademarks and intellectual property

  • provision of marketing and marketing materials

  • development of public relations and promotional campaigns

  • training and support

  • sourcing ingredients

Protection of his or her investment is likely to be very important to a franchisee. The agreement covers this in detail, from renewal rights, transfer with pre-emption to intellectual property that the franchisee might create. These should provide fair terms that incentivise and allow him or her to benefit from having built up his or her business without the franchisor relinquishing too many rights.

This is an incredibly comprehensive agreement, but we appreciate that it hard to compare it to those of our competitors without having it in your hands. We therefore would encourage you to buy it, in the knowledge that if it is not what you need, we will happily give an immediate and full refund to you. We also extend our guarantee period from our standard 30 days to 90 with this document.

Contents

This is one of the longest Net Lawman documents with 35 pages (excluding guidance).

The contents include the following paragraphs:

  • Warranties that the franchisee is able to take on the franchise
  • Grant of franchise
  • Obligations of the franchisor to the franchisee: both initially and on-going
  • Fees and payment terms
  • Rights to renewal
  • Data Protection Act compliance
  • Franchisee’s undertakings
  • Transfer terms: including pre-emption rights for the franchisor to acquire the business
  • Terms relating to the corporate structure of the franchisee
  • Termination
  • Insurance
  • Risk and retention of title
  • Use of subcontractors
  • Intellectual property rights
  • Confidentiality
  • Limitation of liability
  • Publicity
  • Indemnity
  • Dispute resolution
  • Other paragraphs to protect your interests
Sample franchise agreementSample page from the restaurant or café franchise agreement

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Recent reviews

Excellent Service
05 May 2017
Excellent service and document was well laid out and very simple to modify.
Brian Corrigan
Review of the Australian version

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