Buying a Franchise is one of the most popular ways of starting a proven business.
Franchisees buy a licence to operate the franchise business for a fixed term, according to specified systems and rules of the brand established by the franchisor.
There are three main types of franchises
- Manufacturing franchises
- Product franchises
- Business format franchises
Franchise agreements between the franchisor and franchisee try to strike the right balance of rights and obligations between the two parties.
The franchisee must follow certain rules and guidelines, pay certain fees and charges to the franchisor and in return the franchisor has an obligation to ensure that the brand operates according to brand rules, keeps the brand updated and attractive in the market place and provides the franchisee with help and training to operate successfully.
Disputes occur between franchisor and franchisee when some imbalance occurs in the relationship precipitating the dispute.
The franchisor might raise a dispute because it feels the franchisee is acting in a way that might damage the brand.
The franchisee might raise a dispute because it isn’t making enough profit and blames the franchisor either for breach of contract or for making some false and misleading statements about the likely profits to induce the franchisee to buy the franchise.
How can CDMC help?
- We understand the complex rules and law that applies to franchising
- We understand what breeds possible disputes in franchising
- If we are involved early in the dispute, we can take measures to stabilise the situation and then get to work in finding an acceptable resolution
- We take strategic steps to stop the dispute escalating
- We work with the parties in a way that minimises the risk of litigation
- We contain costs to the minimum possible