FRANCHISE LAW
It is an often stated fact that New Zealand has more franchises per capita than anywhere else in the world. This is likely due to our being one of the world's most developed countries, yet with a relatively low population and some distance from anywhere else. It's simpler and cheaper to use a franchise than trying to develop your own business.
However, getting involved with a franchise, whether developing your own, purchasing one from overseas, or becoming a franchisee, does not provide guaranteed success. There are many pitfalls that need to be avoided, some of which can be substantial. This is why everyone getting involved in a franchise, in any way, should be seeking advice from a franchise law expert. It often goes beyond just general commercial law advice which many lawyers can provide. A specialist will be able to provide you with knowledge and advice beyond the general lawyer, no matter whether you are looking at being a franchisor (licensor), a franchisee (licensee), or something in between.
Franchises and Licenses are terms that are often intermingled, with them both being effectively the same thing, with franchises sometimes being a little more controlling (although either term can generally be used).
Franchisor/Licensor
I act and have acted for a number of franchisors, both established and newly developed. The franchisor needs advice that allows them to both help the franchisees grow (as the greatest profit is made from franchisees doing well) while securing and protecting their own intellectual property (IP). The advice provided covers a wide number of topics. Early on it could be helping the franchisor establish a good legal structure to protect their IP, and drafting the documents needed to franchise that IP to the franchisees. There will also be advice given on their legal requirements, including employment agreements, the Consumer Guarantees Act and the Fair Trading Act. There may also be trademarks to be registered, or leases to draft and/or review. Going forward there will be further maintenance of the documents, helping the franchisor deal with wayward franchisees, and developing documentation as the franchise system grows and the legislation and case law develops. For a franchisor, a trusted legal advisor is someone who should be there, contactable, and involved in the formation and growth of the franchise system.
Franchisee/Licensee
The most frequent coverage in the media about franchises is usually when a franchisee stands to lose a great deal of money, or their house, due to a poor investment in a franchise business. In almost every case, the franchisee decided to proceed with the investment without gaining legal advice from a franchise law expert. In doing so they often missed a particular clause or cost, or weren't aware of what they were agreeing to. I have had a number of clients who have only sought legal advice after they have signed the documents, and when something has gone wrong. While I can usually provide them some help, seeking legal advice before signing would usually help them avoid the issue. I've also dealt with almost every major franchise, and many smaller ones, giving me a great deal of experience in both the individual franchise systems, but also the industry in which they operate.
Before you sign the documents, I will be able to give you a better understanding of your obligations under the documents you are being asked to sign. Stretched over a period of time, these may seem small at first, but often grow to a substantial figure over time. Alternatively, a poorly drafted document may leave some areas unclear, or put the franchisee in a situation where they won't be able to achieve future goals, putting their entire investment at risk. This is the importance of gaining advice before signing such documents. A smaller cost now can often save you a substantially larger cost in the future. I may even be able to provide you with advice on how you could maximise the return on your investment going forward, through opportunities in the documents that a general lawyer may miss.
If you have already signed the documents, I can still be of assistance. This could be through helping negotiate a better solution with the franchisor if things have gone badly, or giving you a better understanding on your obligations so that issues can be avoided. I can also assist with the sale and purchase of franchise businesses.
Every franchisor or franchisee should have a trusted and experienced legal advisor. Contact me and I'll let you know how I can be of assistance to you.
