Features A franchise is an agreement or arrangement to conduct a particular business in accordance with an established format, brand, technique, or model. In return, the franchisee usually pays a fee and a percentage of the sales revenue to the franchisor. Examples of franchises include MacDonalds, Prontoprint, Dynorod and Coffee Republic. In a franchise agreement, the franchisor permits the franchisee to use […]
Key Commercial Issues The franchise agreement is largely a matter of contract law. The core of the agreement is the grant to the franchisee of an exclusive or non-exclusive license to operate the franchise business, together with ancillary intellectual property rights, know-how, and assistance. There may be a separate trademark license. The franchisor may agree to give the franchisee exclusivity within […]
Marketing The franchisor may establish a marketing fund and require all franchisees and sub-franchisees to contribute. The franchisee may pay an advertising levy in conjunction with other fees and charges. The fund is for the purpose of advertising, marketing and promotional programmes. The franchisor may operate the fund. The head franchisor may delegate the operation of the fund or a […]
Transfer I The franchisor will usually retain the right to transfer the benefit of the agreement so that it is available for its assignees. The franchisee’s rights are unlikely to be freely transferable. It may have acknowledged that the franchisor has relied on the personnel, character, financial and business ability, etc. of the franchisee. An assignment may arise voluntarily or involuntarily. […]
Franchise Development Direct franchising may be difficult in practice. The necessary backup and assistance may not be easy to provide where the franchisee is in another country. There may be difficulties of monitoring. The franchisors may seek to establish a presence or directly or by way of a joint venture within the third country. As an alternative to a direct […]
Franchise Agreements Franchise agreements are vertical agreements under Irish and EU competition law. They are potentially compatible with competition law. They may benefit from the block exemptions for vertical agreements. They may be justified on competition law first principles, broadly on the basis that their benefits may exceed the adverse effects on competition. Horizontal agreements are agreements between participants at […]