Redstones Property Franchise

The Franchise Agreement – Understanding The Basics – Part Two

The Franchise Agreement – Understanding The Basics – Part Two

In the second of our blogs on the franchise agreement, we continue with advice on aspects of the agreement which relate to the general running of your business.

As previously stated, please note, that this advice is for guidance only and should never replace formal legal advice.  We recommend that everyone who is considering investing in any franchise obtains legal advice from a BFA approved legal advisor.   

Operations Manual

After the initial training has been carried out, franchisees are provided with an operations manual containing all of the information necessary for the day-to-day running of your new business – this manual is your blueprint for a successful business. At Redstones we provide our franchisees with regular updates on any relevant amendments to the manual.

Opening Hours

Many franchise outlets stipulate specific opening hours that all franchisees must comply with.  As a franchisee you should be sure of your ability to comply with these requirements or you may be in breach of your franchise agreement.  At Redstones our opening hours extend to weekends due to the nature of the business, so this is an important consideration for all Redstones franchisees.

Logo, Uniforms, Store Signage – ‘Trade Dress’

To maintain brand uniformity, some franchise agreements will incorporate a ‘trade dress’ clause which extends beyond logos to cover office/premise design layout and staff uniforms.  This clause also covers use of the appropriate signage and logo, which is especially important in a lettings franchise where signage is used to advertise properties available for rent.

Standard Supplies

In some franchise networks, franchisees must purchase basic products from their franchisors.  Your agreement must state which of these purchases are compulsory and ensure that the price is fair.

Business Launch

Where franchisees run their business from an office or retail premises, like Redstones, the franchise agreement covers all elements of pre-launch marketing, PR and advertising prior to the opening of the new business. If any additional financial obligation is required it will be clearly stated in this clause but if in doubt don’t hesitate to ask.

Selling Your Franchise

Ultimately, a franchise business is an asset; something which franchisees may choose to sell at the end of the franchisee agreement.  Whether sold or transferred, this clause will outline your rights as a franchisee in the sale of the business. The franchisor will always have the final approval on who buys the franchise from you and receives an agreed portion of the final sale price.  While it may seem early to consider an ‘exit clause’, agreeing the basics at this stage is vital.

Termination Clause/Contingencies

These clauses will cover other issues such as grounds for a legal termination, together with the obligations of the franchisee and franchisor.  They will also cover the unpalatable but necessary action required when ‘contingency’ events arise, such as the death of a franchisee, the divorce of a husband and wife team with equal shares in the franchise or catastrophic events such as flooding.

In our next article we will look at the importance of territory when considering your franchise agreement.

If you have any questions on the franchise opportunity available with Redstones please don’t hesitate to get in touch.

If you have missed part one of this series please click here.