Following the parties’ interests in a contract is an eternal business dilemma. At the negotiation stage, both parties assure each other of flexibility and full readiness for cooperation, but when it comes to signing documents, various snags appear.
In this context to considering franchising needs to be thoroughly thought out, since joining a franchise agreement should be a deliberate decision both on the part of the franchisor and on the part of the franchisee. Based on the experience and practice of the VigoLex team, only those persons who clearly understand what they want to get from the franchise and what they are ready to provide in return enter into a franchising relationship.
The balance of rights, obligations and responsibilities of the parties is the earnest of a successful franchising relationship, which is achieved through fair cooperation and competent legal support of relations.
VigoLex lawyers state that there are always several important points in the relationship between the franchisor and the franchisee, namely:
- suppliers: in the franchise agreement and its annexes, it is customary to determine the level of product/raw material quality that the franchisee should purchase: it is important to fix these conditions in such a way that, on the one hand, guarantees the supply of exceptionally high-quality products, and, on the other hand, does not reduce the list of suppliers to one or two names;
- equipment of the premises: by analogy with the supply of products/raw materials, it is important to give the franchisee reasonable flexibility in terms of equipping the premises for conducting business, at the same time limiting it to the requirements for the quality and functionality of such premises;
- competence of the franchisor and the franchisee: the franchisor should not have the right to control every step and sigh of the franchisee, and the franchisee, in turn, should not be allowed to do anything under the brand name;
- consultations: the franchise involves constant cooperation between the franchisor and the franchisee: the franchisor may require certain changes in the use of the brand, the franchisee may need advice on a particular issue, and therefore, it is important to think over an effective and mutually beneficial mechanism of consultations and negotiations;
- applicable law and jurisdiction: in most cases in Ukraine there are foreign franchises, that is, the transfer of the right to work under the brand of foreign companies. Accordingly, the franchise agreement must clearly establish the applicable law, as well as regulate the procedure for resolving disputes and determine the competent court or arbitration.
In the event of a conflict situation between the franchisor and the franchisee, VigoLex is ready to represent the interests of any party, using both non-jurisdictional methods of protection (mediation, negotiations, etc.), and jurisdictional (appeal to court or arbitration, as well as other competent public authorities of the relevant country).
VigoLex team will professionally help you to understand the issues of legal support of franchising transactions. As part of the analysis of a specific situation, VigoLex can provide legal support in the matters of:
- development of a customized solution for a specific case;
- legally correct registration of the franchise;
- development of a fair system enabling the balance the rights and obligations of the parties;
- risks identification and elimination;
- representing the interests of any party in the event of disputes, etc.