Section 3 of 6

If YES – click here for Question 4.

If NO – you should consider adopting a Unit Franchise Structure.

A Unit Franchise Structure allows you to grant a third party (a Unit Franchisee) the right to operate one Outlet of your franchised business and/or provide your services (a Unit Franchise). This is the simplest and most common form of domestic franchising.  We can advise you further regarding this structure if necessary.

To document the above structure, you will need enter into a Unit Franchise Agreement with each Unit Franchisee in respect of the Unit Franchise that it will be operating.

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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