Nowadays, entrepreneurship is developing rapidly, and therefore fewer and fewer niches for organizing and managing business are becoming available for beginning entrepreneurs. As a result, a beginning businessperson faces the issue: it is necessary either to occupy a very narrow-profile niche or to start doing what many are already doing at the market, and, accordingly, to fight competition.
Franchising offers the third option – starting your own business using a brand, efficient business processes and a successful business model of another business.
Franchising allows you to develop your own business using a brand already known at the market. This is an ideal business model, but as usual, there are some nuances
Franchising is, first of all, a contractual relationship that exists at the turn of civil and commercial law. Therefore, the legal framework for franchising is an agreement between the franchisor – a person or a company that sells the franchise, and the franchisee – a person or a company that buys such a franchise.
Contractual work is the basis of legal support for franchising. VigoLex experience shows that many franchisors keep and cherish the brand that they have managed to create. Therefore, in contracts with the franchisee they like to fix thousands of fines for any action, the right to control the franchisee’s work 24/7 and withdraw the franchise at any time without any explanations. These conditions are not the fairest ones.
On the other hand, many franchisers fix the franchise terms in a rather superficial and generalized way, leaving many terms for the parties’ agreement or hoping for the franchisee’s decency. As a result, in the event of real conflict situations between the franchisor and the franchisee, the franchisor does not have effective mechanisms to force the franchisee to act adequately, and the brand may suffer significant reputational damage.
Based on these features, VigoLex team has developed its own unique strategy for supporting franchising transactions and the process of drafting franchise terms. From assistance with drafting franchise terms and legal support for brand registration to representing the interests of a franchisee in a franchising deal, VigoLex team provides high quality legal and consulting services.
A quality franchise agreement is the earnest of success for the correct use of the franchise for both the franchisor and the franchisee.
In a franchising relationship, both parties are interested in drawing up a quality franchise agreement. It is good for the franchisor that it will know 100% exactly how franchise is used and will be sure that the franchisee will not violate the terms of franchise usage. It is good for the franchisee not to think up anything – there is a drawn up and thought-out business plan, which it must adhere to, and if something happens, one can always consult the franchisor about this.
Each case requires an individual approach, and therefore VigoLex does not provide its clients with template solutions but develops an individual action plan for a certain situation, based on the analysis of the client’s needs and wishes.
Doing business as a franchisee or a sub-franchisee is not as simple as it might seem at first glance, so it is important to know all the hidden hazards and be able to protect oneself. VigoLex lawyers are adept in the traits of franchising in Ukraine as well as other in countries, and in these matters, they can be relied on.
Maryna Lukianova – Director of Domino’s sub-franchisee company
Get a consultation
Franchising is a format of cooperation in which one party (the franchisee), on a paid basis, receives the right to use the brand, business reputation and commercial experience of another company (the franchisor) to develop its own business.
Franchising and franchise are two parts of one whole.
Franchising is a specific format of business and legal relations.
Franchise is most often called a set of rights that the franchisor for a certain amount is ready to transfer to the franchisee for use.
Most importantly, the franchise must describe the specific mechanisms of interaction between the franchisor and the franchisee: a list of rights that are transferred for use, the procedure and the schedule of payments that make up the business model, the instructions and the procedures for its use, conditions for the exclusivity of the franchise and non-competition of the contractual parties, other guarantees, obligations and responsibility of the parties, etc.
The franchisee uses the franchisor’s brand and business solutions to develop their own business. For this, the franchisee pays the franchisor a fixed royalty on its income.