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Franchise agreement : the important points

Before you commit, it is imperative to comb through all the legal documents and understand your rights and your duties. as the years pass, more contracts becom

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Franchise agreement : the important points

Before you commit, it is imperative to comb through all the legal documents and understand your rights and your duties.

as the years pass, more contracts become thick," notes Charlotte Bellet, an associate lawyer with the firm BMGB, one of the few to defend the franchisees. And to add : "Never, they were also unbalanced, in favour of the head of the network". To give back its letters of nobility to the franchise, the lawyer promotes from 2017, under the name of "franchise fair", models of documents, pre-contractual information (DIP) and contracts that are "perfectly clear and anti-conflict". Seven networks, including Koala Laundry, and Lav'Because they have already chosen to adopt and to ban certain clauses detrimental to the franchisee. A good point, because once linked with a brand, the question for the franchisee to negotiate anything or leave the network at will. Even if the reform of the law of contracts, effective October 2016, has moralized the relationship between the networks and their members, it is necessary to be very vigilant.

Before investing savings and committing to years with a signboard, a candidate must absolutely look through the documents that will be delivered - and this, with the help of an accountant and a lawyer specialized. Given the importance of the sums involved, it would be absurd to mégoter on their fees : for around 1,000 euros each, these experts will tell you if it is reasonable or not to sign and, if need be, what he must negotiate. The so-called law Doubin of 1989, and more specifically article L. 330-3 of the French commercial Code, protects applicants by requiring the networks to provide, in advance, a draft contract and a DIP to engage informed. The candidate has twenty days minimum to peel these documents, which commit the government to nothing except to keep the data confidential. Take the necessary time to study things, and do not give in to any pressure from the network who will do anything to speed up the process.

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DIP : peel all the data

With its annexes, the DIP may be several tens of pages. If the reading is first cold in the back, everything must be scrutinized and verified. Follow the guide.

the history of The network : the development of the brand (launch, redemption, rhythm of openings, etc.) must be traced back to at least the last five years. On the Internet, in discussions with the developer and with franchisees in place, educate yourself thoroughly on the growth of the network, on its strategy, as well as on the curriculum of its officers (moderator included, since it is to him that you will be dealing on a daily basis).

The state of the market : the general state of the market details the positioning of the concept, its customers and its prospects of development ; the local state is based on demographic data and on a survey of the competition to identify potential customers in the area coveted by the candidate. You have to check if these data are accurate (thanks to the Insee, in the town hall, at the chamber of commerce, the town centre manager) and then make your own market study. This painstaking work will allow you to describe minutely your prospects based on the specific address where you want to install.

The list of companies in the network :ask the head of network how it manages the coexistence between franchisees, branches, corners, stores, multi-brand... "please also Ask about the distribution of profits in the case of sale online," recommends Olga Zakharova-Renaud, the firm BMGB. Examine in addition to the quantity of renewals of contract by the franchisees, as well as the number and pattern of breaks (which should be mentioned for the last twelve months, but go back beyond that). "Beware if the DIP mentions that a contract ended by mutual agreement or because of family problems : in reality, the franchisees lay almost always the sponge because their business is not profitable," warns Monique Ben Soussen, a lawyer specializing in the defense of the franchisees.

The registration number on the website of the national Institute of industrial property (INPI) Bases-marques.inpi.fr, make sure that the company franchiseuse well has the rights on the brand, and that it has not created any network competitor under a name close to.

The contract of reservation of area :to "block" the territory coveted, time to find a local suitable, it is often possible to sign a reservation contract area, subject to payment of an amount (subsequently deducted from the entry fee). See in the DIP if this amount will be forfeited, in whole or in part, in the event you sign ultimately not the franchise agreement.

Contract : clauses to monitor

a five-to seven-year contracts, you are committed for the long term. Some clauses subtle, not as obvious.

The signatory parties : do not agree to the clauses specifying that you agree on your own behalf, "and that the clauses of porte-fort, solidarity or a commitment from a surety, alert Charlotte Bellet. In case of problems during the contract, you would be responsible on your personal property.

"Do rather a different warranty to the retailer, for example, an amount recorded in an account" advises Florian de Saint-Pol, who defends franchisors and franchisees.

the duration of The contract : assisted by your accountant, calculate how long you will get back your initial bet, and align the term of the bank loan and the contract. "If you want to extend the latter, the franchisor has all the chances of you to say "yes", according to the lawyer. On the other hand, don't hope too much to shorten a contract of less than five years : "A franchisor gives you in a few weeks, all that he has learned in several years ; it is normal that it doesn't let you leave after two years." If necessary, negotiate for the agreement to take effect at the launch of your business, and not before, so that the first inflow of money helps you to settle the charges.

The obligations of the franchisor

The transmission of know-how :this is the b. a.-ba free. It is the set of methods (commercial, technical, logistical, computer) the network transmits to the franchisees. These methods are tested, approved, and permit the reiteration of the concept. This know-how is secret (it must not be disclosed), substantial (it provides a competitive advantage for the franchisee and the consumer) and identified (it is formulated in writing).

The cover : this is another pillar and an obligation for the franchisor, who must train and support its troops. Do not rely on promises oral. See what is provided for by the contract, in particular in terms of animation and frequency of visits. "If it is written that the facilitator will be able to make so many visits per year, this will mean that you will... or not !", leading by example Olga Zakharova-Renaud.

The area of exclusivity : the franchisor grants you a zone of exclusivity, but this is not always very clear. He will have the freedom to install points of sale located in train stations, airports or in shopping centres, even if they are located in your geographic area.

the duties of The franchisee

standards compliance : throughout the contract, you will comply with the know-how of the franchisor (shop design, supply, recommended prices, methods of sale, rules of hygiene...). "In case of serious breach, warns Marc Lanciaux, a lawyer specializing in the defense of the retailers, the network may terminate the contract to the detriment of the franchisee" - the latter to then pay all the royalties that were to be paid, in addition to any damages and interest.

The transmission of the unit : the day you want to sell your business, beware of the approval clause, which gives to the head of the network, to be able to validate the buyer. "So do register in the contract a list of objective criteria which may justify a refusal of the franchisor," says Olga Zakharova-Renaud. Attention also to the terms of the determination of the prices and estimates - they are likely to reduce the value of your business assets.

Read our complete file

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The covenants not to compete :once your contract is finished, you should be able to continue your activity in your local area. Do not sign, therefore, never have a non-competition clause, which would require you to you convert at all. You should be wary of the clauses of non-affiliation, which prohibit you from joining a brand rival : negotiate, for example, for the clause focuses only on the two major competing networks... which will give you the freedom to reach the n° 3 of the sector.

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