I've had a careful read through all the posts and added some comments. These are my own opinion but I believe them to be accurate in respect of franchising. My Franchise Agreement (Contract) was drawn up by a specialist Franchise Solicitor so any statements regarding the terms and conditions of the contract are factual.
Dave0123:
if you only trained the fella up for one week how did he learn the jobs or round when you passed the work on to him? i mean where to drive to and so on if he had never been to the house before?
Each new franchisee I took on was given a list of all the customers I was passing on to him (between £200 and £400 per week) with a letter explaining to the customer that he was going to be cleaning their windows in the future. He then went out and delivered all the letters, learning the location of the jobs as he went.
WinproClean:
Is there anything in the contract to prevent the franchisee from running a separate business, totally separate to his franchise?
No. Except that it must not:
(a) Be of a business type that in any way competes with my business, or:
(b) Adversely affects the franchisee’s performance in the running of his franchise.
Davids3511(answering the above):
No, not once it is nothing to do with the franchise. I see this as a weakness. What if he decided to setup a domestic cleaning business based on the customer base for his wife to run. Don't think I could stop that but I wouldn't be too impressed and probably wouldn't renew his contract one it expired.
The contract prevents this. The customer base is provided to the franchisee exclusively for use in the running of his franchise. Doing the above would be a clear breach of contract and grounds for termination.
Cowboy
what happens if they let the business slide??
At the commencement of the franchise a target is agreed. The franchisor must provide enough work (within an unspecified time scale) to allow the franchisee to achieve the target; the franchisee must complete the work provided (less allowance for ‘not this times’, bad weather etc – all at franchisor’s discretion) Consistently losing jobs without acceptable explanation is breach of contract leading to termination.
Crystal Clear
how about pay him 80% of all money into your account and you keep 20% and all the names and numbers of customers you keep in actual fact i guess you manage it but this way he hasnt got any details could it be done that way around ?
You can’t pay him, that would make him an employee. Franchisees are independent business owners operating under a legally binding contract. They must schedule their own work, collect all the money etc. and then pay royalties to the franchisor. For this reason they must have all the information on each and every customer on their round.
Dave0123
at the 20% i imagine will be based on turnover
In my system, yes. Some franchises work on value of work available, so the franchisee has to pay whether he manages to do the work or not, some operate on a fixed fee – so much per week/month regardless of how much work has been done.
Dave0123
I know you could collect certain amounts of money on his behalf though through customers paying on-line through the main business bank. bit like direct debit. This must be legal as there is another company not window cleaning related but collected direct debits on behalf of there franchise's
Quite true, but then the franchisor would be acting as a trustee on behalf of the franchisee. All money collected would still be the property of the franchisee and must be kept in a separate account and submitted (not “paid”) to the franchisee without any deductions etc. The franchisor then invoices the franchisee for his royalties.
Ian Wicks
what happens when you are vat registered and hes not or vice versa, im not knocking you interested thats all
The same as with two completely unrelated businesses. The Vat registered one has to issue vat invoices and add vat to the invoice total. The non-registered one doesn’t, but can’t claim back the vat he has to pay.
Crystal Clear
all funds get sent to you he then Invoices you And you pay him out Accordingly
As for Dave0123 above. This should be avoided as much as possible as it increases the franchisor’s turnover unnecessarily and causes a lot of extra administration and accounting work and can also fog the issue of whether a franchisee is genuine or a disguised employee.
Dave0123
i imagine though if people pay by online baking it would still get sent to the main company bank account as it would be set up as a payee on customers bank, you would probably just take the royalties fee from the amount that comes through. Cheques would still be sent to company business anyway i presume. that's how id do it anway
Answer as above: All payments should go direct to the franchisee, doing it your way could give HMRC grounds to declare your franchisees are really employees unless you are extremely careful in how you account for and transfer the money.
