Franchising – the advantages and the disadvantages
Franchising is becoming an increasingly popular business model in the UK. The number of franchise systems operating in the UK in 2010 was 897 which is a 15% increase from 2006. The total turnover rose to £12.4 billion in 2010, again representing a 15% increase for the same period.
Thorntons have recently announced the closure of up to 180 shops over the next 3 years. Those to be closed are all stores directly owned and run by the company. It is hoped that they will replace the majority of those affected with franchised stores. They have confirmed that they wish to expand their business partly using franchising opportunities.
What is franchising?
A franchise occurs when the owner of a business (franchisor) grants a licence to another person or business (franchisee) to trade under their name selling the franchisor’s products or services.
The most common type of franchise is a business format franchise. Fast food restaurants are an example of this e.g. McDonalds. The other types of franchises are product franchises (e.g. Thorntons) and manufacturing franchises (e.g. coca-cola).
The franchisee will be required to pay an initial fee to the franchisor plus a percentage of the sales revenue. They may also be required to pay further fees for marketing, training and possibly rent.
The Advantages
• There is less likelihood of failure than with a new start up business as it is based on an existing product, services or method.
• The franchisor will usually give you support and training.
• You will benefit from any advertising or promotion made by the franchisor.
• Relationships with suppliers are established creating an increase in your purchasing powers and a reduction in your operating costs.
• Existing brand names and trade marks can be used.
• Financing the business can be easier as banks may be more inclined to lend money to buy a franchise with a good reputation.
The Disadvantages
• Costs can be high. As detailed above there is an initial fee plus royalties and possibly other fees for advertising and training.
• The franchise agreement will usually include restrictions on how you can run the business.
• Local goodwill may be transferred to the franchisor at the end of the franchise period.
How can we help?
Whether you are a franchisor or a franchisee it is imperative that your rights and interests are protected in the Franchise Agreement. Franchise Agreements vary but should deal with the following:
• Duration (term)
• Geographical territory
• Fees
• Support by the franchisor
• Restrictions on the franchisee
• Termination
• Intellectual Property Rights
• Advertising/marketing
• Monitoring the performance of the franchisee
• Insurance
The Franchise Agreement provides protection for the franchisor and governs how the franchisee can trade. With potentially large sums of money being invested it is vital that both parties obtain legal advice before entering into a Franchise Agreement. Whether you require a new Franchise Agreement to be drawn up or a review of an existing Agreement we can help…
Sarah Miles (profile) 
Thursday 14th July 2011
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With the ever increasing cost of living and the list of UK firms announcing restructuring, redundancies and closures - what are your options to recover your debts to keep your business afloat?
Nockolds New Debt Recovery, provides an excellent overview of the options available to you, click here for more details
Alex Haddad (profile) 
Erin Duffy (profile) 
James Brunton (profile) 
Tuesday 5th July 2011
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With Thornton’s today announcing that it is to shut at least 120 stores and with Jane Norman and Habitat both having gone into administration in the last week the threat of redundancies is looming ever larger over many UK employees. Here we answer some of the most Frequently Asked Questions from employees at risk of losing their jobs.
Quick Reference: Redundancy Questions and Answers
For more information or advice contact Gary Smith on gsmith@nockolds.co.uk
Bev Moseley (profile) 
Gary Smith (profile) 
Tuesday 28th June 2011
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With yesterdays report by the International Monetary Fund (IMF), there is no better time to get your business in shape by claiming your Voucher at the Business Tool Kit Seminars by Nockolds.
The government has welcomed an International Monetary Fund (IMF) report which has said that no changes are needed to UK economic policy http://www.bbc.co.uk/news/business-13668574
Clive Wadham Smith (profile) 
Sarah Miles (profile) Tuesday 7th June 2011
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With less than two weeks to go until Harlow Business Exhibition the excitement and hype around the event is beginning to mount.
A new addition to the Exhibition this year is the Nockolds Seminar Room where we will be launching The Nockolds Business Tool Kit.
To celebrate our launch Nockolds are giving away vouchers for 1 of 3 FREE business services with the Business Team.
- Employment Contract Health Check
- Outsourced Legal Team Contract Review
- Debt Recovery Clinic
Employment Contract Health Check:
Review of your policy documents and specimen contracts, confirming areas that require updates. Followed by a jargon-free letter of advice providing guidance on any areas that pose a potential risk to your Company's legal position.
To qualify send in copies of your contracts to Gary Smith at Nockolds along with your validated voucher. Gary will then contact you to make an appointment.
Outsourced Legal Team Contract Review:
Review of one of your commercial contracts followed by a 30 minute appointment providing you with initial feedback.
Contracts such as your Terms and Conditions, a Partnership Agreement, a Shareholders Agreement or any other commercial contract can be reviewed.
To qualify send in your chosen contract to us in advance of the appointment along with your validated voucher, so that we can prepare and give you as much feedback as possible during the meeting. Once we have received your chosen Contract a member of the Team will contact you to make a convenient time for your appointment.
Debt Recovery Clinic:
30 minute meeting with our qualified Solicitors to discuss your outstanding debt and the options available to you or 3 Free Debt Recovery Letters to demand payment.
To qualify for either of the Debt Recovery options contact Erin Duffy at Nockolds.
To claim your voucher simply attend one of our Business Tool Kit Seminars at the Harlow Business Exhibition June 14th and you will receive a signed voucher.
BOOK YOUR PLACE NOW or contact Marketing on 01279 755 777 marketing@nockolds.co.uk for more details
At Nockolds we help businesses avoid problems by taking preventative action. Our Business Tool Kit seminars can help.
The Nockolds Tool Kit - provides all the essential information businesses need to flourish and grow - starting off with the Tools for your Business Seminars at Harlow Business Exhibition:
The Legal Business Tool Kit
11:00 - 11:45am - Clive Wadham-Smith, Consultant Solicitor, Nockolds LLP
Taxation Tool Kit
12:00 - 12:45pm - Peter Warren, Tax Director, Bird Luckin Accountants and Business Advisors
The Tools to Manage the latest Employment Issues
2:00 - 2:45pm - Darren Hayward, Managing Partner, Nockolds LLP
Social Networking Tool Kit
3:00 - 3:45pm - Steve Clarke, Business Link
BOOK YOUR PLACE NOW or contact Marketing on 01279 755 777 marketing@nockolds.co.uk for more details
Clive Wadham Smith (profile) Erin Duffy (profile) Gary Smith (profile) James Brunton (profile) Sarah Miles (profile) Tuesday 31st May 2011
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