Franchise development (Franchising)
The development of a franchise is necessary when the owner has decided to scale his business with minimal investment on his part and with a guarantee of making a profit in the future. This is a form of business organization in which the owner (franchisor) transfers to an independent businessman or company (franchisee) the right to organize a similar business under his own trademark. This business can be associated with the production, sale of goods and / or the provision of services for a fee in exchange for compliance with the rules of doing business – a franchise package.
What conditions are needed to create a franchise?
- An authoritative, well-established brand on the market.
- Clear methods, technology of work, certain know-how or intellectual portfolio of the business as a whole.
- Well-coordinated team, proven over the years.
- Reliable suppliers and contractors.
Franchise development is one of the priority areas of work for the SION patent and tax law firm. Our specialists help you build the franchise business plan. They handle the legal process, the finance process, and the documentation. They handle IP protection. They prepare the business rules and standards. They define the methods and conditions for the franchise network.
The leading lawyer of the practice recommends conducting a comprehensive Due Diligence before starting to draw up a franchise business plan and agreement in order to identify possible unprotected rights and prevent the risks of losing a business.
What Is a Franchise Agreement?
A franchise agreement is a legal contract. It sets the rights and duties of the franchisor and the franchisee. The agreement must state the subject of the contract. It must state the rights and duties of both parties. It must state the penalties for breach of contract.
The agreement must also protect a clear territory. Many franchisors want to cover many countries. But a franchise agreement gives no protection in a country where the franchisor has not registered the trademark. You must register the trademark and other IP rights first.
Both individuals and companies can sign a franchise agreement. Both parties must be registered businesses. Our lawyers and patent attorneys first review your business. We identify the risks. Then we draft the terms of the franchise agreement. To book a consultation, email us at info@sion-ip.com.
Franchise registration
- trademark;
- industrial design;
- invention or utility model;
- copyright.
Franchise vs. Commercial Concession
People often confuse a franchise agreement with a commercial concession. The two agreements are similar. But they are not the same.
A commercial concession usually covers industrial assets, such as factories or roads. The goal is to modernize these assets and generate profit for both sides. A concession contract runs for a long time. It does not need regular contact between the parties.
A franchise agreement is different. It needs constant contact between the franchisor and the franchisee. Both sides share know-how. Both sides must follow the same business standards. The franchisee uses more than a brand name — the franchisee also uses the franchisor’s reputation. Without proper control, the reputation can suffer. This can cause financial loss. Registration of the franchise agreement helps prevent this risk.
Royalty in the franchise
Based on the research of the International Franchise Association (IFA), the world traditionally uses the following approach to payments within the framework of franchising:
- The lump-sum fee is a one-time payment-greeting, it is made as a guarantee of fair use of the trademark of another IP, compliance with the rules and standards.
- Royalty – periodic payments (once a month, quarter or year), they are a specific percentage of revenue, can be fixed or mixed.
Royalty rates depend on many factors, such as the business industry, country or region where the franchise is used, competitive advantage, and so on.
To determine the optimal royalty rate, we most often carry out an assessment of intellectual property rights. Our experts will conduct an assessment at a high professional level and in the shortest possible time. We have been working for over 11 years, the average professional experience of a certified appraiser is 20 years.
The advantage of contacting us is a qualified, professional preparation of business rules for franchising, a draft agreement, an assessment of the cost of a franchise, registration of intellectual property rights, and other legal and consulting services.
Franchise business experience
For more than 11, our company has been analysing different businesses for the implementation of franchise opportunities. We have developed and successfully operate franchises in the following business sectors:
- beauty salons
- medical centres
- flower boutiques
- resistance bands
- catering business
- real estate agencies
We create a franchise business plan for the development, taking into account the legislative characteristics of more than 50 countries. Our main feature among the franchise developing company is the identification and study of financial, tax and legal risks.
Franchise development price
The documentary guide to starting a business is about the rules and other requirements of running a business. They are carefully detailed so that the franchisee does not have any questions about where to purchase raw materials, which premises to choose, and how to act in a given situation.
The cost of our services is formed taking into account the creation of the manual, the preparation of the franchise agreement and legal support of the transaction.
The sections included in the manual, the prices of services are presented below:
| Actions | Volume | Price, USD |
|---|---|---|
| Corporate identity, object design and merchandising, presentation | from 30 pages | from 1000 |
| Personnel Management | about 100 pages | from 500 |
| Business processes | 100 pages | from 1000 |
| Business start-up instructions | from 25 pages | from 600 |
| Financial model of a franchise | from 20 pages | from 2000 |
| Control and reporting standards in the trade network | from 20 pages | from 1000 |
| Marketing Standards | from 10 pages | from 800 |
| Legal documents | from 40 pages | from 1000 |
| Total amount | from 7900 |
Before starting cooperation, we always sign a non-disclosure agreement for confidential and commercial information.
To order the development of a franchise formation, contact us by email: info@sion-ip.com.
FAQ
What is a franchise?
A franchise is a business model. A franchisor owns a proven brand, business system, and know-how. A franchisee pays for the right to use them. The franchisee runs a business under the franchisor’s brand and rules.
What do I need to register a franchise?
You need at least one registered intellectual property object. This can be a trademark, an industrial design, an invention, or a utility model. You also need a clear business system: staff training, supply rules, and quality standards.
How do I start developing a franchise?
First, we audit your business. We check that your business model is stable and profitable. Next, we prepare the franchise business plan. Then we register your trademark and other IP rights. Finally, we draft the franchise manual and the franchise agreement.