Mutual duties and services of the franchiser & each franchisee

 

Brief overview of the franchisers and franchisee’s mutual duties, services, rights and obligations.

These duties are specific to each party but complementary. They must be executed in a spirit of cooperation, dialogue and transparency. This list is illustrative and non-exhaustive.

 Franchisee  Franchisor
 Optimise his sales on his allocated territory or customer group  steering the business’s overall development strategy
 Doing so in full respect of business format as contractually defined, including respecting the common identity and reputation of the franchise network, as well as the confidentiality of the business know-how transferred  Protecting its concepts and IPRs, including the franchiser’s know-how.
The EC Block Exemption Regulation 330/2010 (see below) defines IPRs as such: “‘intellectual property rights’ includes industrial property rights, KNOW HOW,
Meet the franchise format’s standards and procedures
developing and improving the franchise concept and KNOW-HOW to ensure its continued competitiveness, reputation and customer satisfaction
provide the requested information as well as allow personally developed improvements to be integrated into the company’s know-how for the benefit of the network
 Developing and improving its start-up and continued assistance to the franchisee in the course of the agreement (training, general management assistance). It provides the marketing operations instructions (Manual or “bible”) to enable the franchisee to carry out the business
 cooperate with new promotion programs as well as upgrades of the format/system   Developing responsible recruitment strategies of franchisees
  guaranteeing the end-customer the best possible service  Ensuring the promotion of the brand on the market through appropriate advertising campaigns
  Pay the fees* according to the contractual schedule  Develop efficient record-keeping systems for purposes of control, adjustment, advice, benchmarking
   Set up regular platforms for franchisor-franchisees communication, including working commissions
  Foresee conflict management procedures
   Update all binding documentation: contracts, operations manuals, pre-contractual disclosure obligations, as the case may be (see Regulation)

* Fees and costs: a franchisee buying a franchise “value package” including IPRs and access to the franchisor’s know-how will pay a combination of different types of fees. Each franchise format defines its own types of fees and fee schedule.
Fees may include:
  • Entrance or start-up fee which usually included a licence fee
  • On-going royalties as service fees for the on-going support services of the franchiser
Advertising fees

Franchisees will also, in the course of time, be asked to invest in the upgrading costs of the format/system.
Upgrades are necessary to keep up with market trends and to maintain the competitiveness of the brand.

“understanding franchisee fees” see: http://www.thebfa.org/join-a-franchise/understanding-franchise-fees

 

 

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