Section 2 of 6

If YES – click here for Question 3.

If NO - you should consider adopting a Corporate Franchise Structure.

A Corporate Franchise Structure allows you to grant one or more of your subsidiary companies (a Corporate Franchisee) the right to operate an Outlet of your franchised business and/or provide your services.  In effect you are opening new Outlets or expanding the operation of your services yourselves, through your subsidiary companies (a Corporate Franchise).  We can advise you further regarding this structure if necessary.

To document the above structure, you will need to enter into Unit Franchise Agreements with your subsidiary companies. We can assist you with drafting the Unit Franchise Agreement and other relevant agreements as well as advising you on the legal and commercial issues that you will need to consider.

Other points to consider

There are several other issues that you may need to consider or discuss with us further. We set out some example issues below:

• Do you have your know how and method of operations in written format? i.e. do you have an Operations Manual?
• Have you conducted an audit of your Intellectual Property (trade names, logos, trade marks etc.)?
• What fees will you charge?
• Will you require the Franchisee to give financial guarantees (either individual or corporate) in respect of its financial obligations?
• Will you expect the key individuals of the Franchisee’s business to enter into an Undertaking of Confidentiality and Non-competition?
• Prior to entering into the franchise relationship will you wish to run a pilot franchise operation?
• Prior to entering into the franchise relationship will you seek to legally protect any Confidential Information you disclose and or take a deposit from a potential Franchisee.

© Field Fisher Waterhouse LLP 2008

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