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Buying a franchise

If you are considering buying a franchise, a number of things should be considered. A franchise is an agreement between two parties, the buyer of the franchise (‘the franchisee’) and the seller (‘the franchisor’). In the franchise agreement the franchisor agrees to allow the franchisee to market and sell their products and services in return for an agreed fee.

When a franchisee is considering buying a franchise, they must ensure that they have the capital to do so. The price of purchasing a franchise will depend on the success and reputation of the business being purchased. If the cost of purchasing the franchise is high, the franchisee should consider how long it will take them to recover their money through profits.

There are also legal considerations to consider when buying a franchise. The franchise agreement should give the franchisee the right to use the franchisor’s intellectual property rights. Such intellectual property rights could include the name of the franchisor’s business (which is likely to be a registered trademark). If the franchisor does not give the franchisee the right to use their intellectual property rights then it may not make commercial sense to buy the franchise.

In the franchise agreement the franchisor may insist that the franchisee only uses their products and services in a certain way. They may also attempt to prevent the franchisee from competing with their business. When considering buying a franchise, the franchisee should consider whether they are willing to submit to such terms.     

If you would like to obtain legal advice and information on buying or selling a franchise, Caven can put you in touch with a local specialist Commercial / Franchise Solicitor free of charge. So, if you have any questions or would like our help in finding local Commercial / Franchise Solicitors please call us on 08001 221 2299 or complete the web-form above.

 

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