[poleman]

Big problem with Franchise! is the legal licence cost 25k +

[elite mike]

interesting reading Ian and thanks to window washers for the easy download.

yes thanks from me as well

[Ian Lancaster]

Big problem with Franchise! is the legal licence cost 25k +

? Don't follow

[poleman]

Big problem with Franchise! is the legal licence cost 25k +

? Don't follow

Ian, sorry was a bit vague

Business format franchising is a popular and successful way for companies to expand and for people to start their own business with less risk.

Most, if not all franchisers have to format the business with license, now these licenses costs run into many thousands of pounds, which can then be resold, or have you just signed up franchisee on a signed agreement and saved the many thousands of pounds involved 

Also do you franchisee pay percentage of the turn over of revenue or is it a on going fixed fee

[windowwashers]

Big problem with Franchise! is the legal licence cost 25k +

? Don't follow

Ian, sorry was a bit vague

Business format franchising is a popular and successful way for companies to expand and for people to start their own business with less risk.

Most, if not all franchisers have to format the business with license, now these licenses costs run into many thousands of pounds, which can then be resold, or have you just signed up franchisee on a signed agreement and saved the many thousands of pounds involved 

Also do you franchisee pay percentage of the turn over of revenue or is it a on going fixed fee

can you tell me if this is fact that they run into thousands or could please.

I would also like to know where you are getting this information from, I am not saying you are right or wrong in any way I am just very interested to hear your feedback.

Ian

[poleman]

Company local to me, venture into franchising, and spent thousands in licences, then got into financial problems, tried to sell the ltd company, which I was interested at the time, and saw the profit and lost accounts, one figure was the licenses costs, which run into thousands of pounds (don’t remember the exact figure, was 5 years ago), I didn’t buy as I was advice by my accountant not to buy as he was about to go under

[windowwashers]

Company local to me, venture into franchising, and spent thousands in licences, then got into financial problems, tried to sell the ltd company, which I was interested at the time, and saw the profit and lost accounts, one figure was the licenses costs, which run into thousands of pounds (don’t remember the exact figure, was 5 years ago), I didn’t buy as I was advice by my accountant not to buy as he was about to go under

is this because the company was new to this and spend to much money without knowing what they was doing ? it does sound that way to me, I would like to know the true cost just to register a franchise business.

[Ian Lancaster]

I think we're talking here of Limited Companies.  If you are a registered Ltd Company there are all sorts of rules and regulations.

For a sole trader to franchise his business this is a totally different thing, it is a private agreement between the franchisor and the franchisee.

You do not need a licence to sell a part of your business to someone else to trade under your name, which is exactly what I am doing.

I think also there may be some confusion here as to fees to solicitors for the preparation of Business Format Licences (Franchise Agreements).  These can be very expensive, but you are not required to use a lawyer to reach an agreement between yourself and another party as to how you are going to set up your business relationship.  The only down side is that a DIY agreement could leave you open to problems if things occur which are not covered by the agreement.

I wrote my own agreement and one of my franchisees took it to a solicitor for an opinion.  The outcome was that there were several minor points I hadn't worded very well, and were somewhat ambiguous, but on the whole the agreement was fair and workable.

Don't be taken in by unscrupulous legal practitioners.  Two (or more) people can reach a mutually acceptable arrangement which they both sign and which is then binding.

A Franchise Agreement is only a more formal way of stating how a business arrangement is to be made, providing none of the elements are illegal, or demonstrably unfair, then the contract is binding.  Every time you buy something you enter into a legal contract to pay for the provision of goods or services.  Entering into a Franchise Agreement is just the same, in the first instance, the Franchisor agrees to sell the goods/service (the right to trade and any equipment included in the deal) and the Franchisee agrees to pay the Franchise Fee (the price of those goods/services).  The ongoing situation is just the same, the Franchise Agreement defines what services the Franchisor has to provide (Admin/advice/support/work etc etc) and the price (the royalty) that the franchisee has to pay for those services.

[dai]

Thanks Ian, this has made very interesting reading. Have you made any changes to your franchising agreements over a period of time?
It is so important to get the right agreement from the start, so anything you have learned with the benefit of hind sight would be very helpful. Dai

[Ian Lancaster]

Dai,

All I can say is that anyone contemplating going down this route should take some sort of advice. In the first instance, a visit to www.bfa.org would be a good step. 

I had the benefit of having owned a franchise, and as Vince Green said on another thread (albeit very one-sidedly) there are unscrupulous franchisors out there.  Having been involved with one where the franchisor was not entirely honest in the first place, I view everything from the franchisee's angle to make sure I am as fair and open as possible.  My Agreement is based on the one I signed when bought my franchise, but modified to ensure it is as fair as possible to all parties.

I have changed and adapted it as required, and I'm always open to new suggestions.