Leathes Prior: Selecting The Right Team
International football tournaments always emphasise the importance of selecting the right team. Jonathan Chadd of Leathes Prior recommends franchisors take similar considerations when preparing to franchise a business
With the 2006 World Cup now behind us there has been intense discussion and debate amongst England supporters as to the team Sven-Göran Eriksson selected to play for England. Picking the wrong players for particular positions and the wrong combination of players had disastrous consequences for England's performance, just as selecting the right ones could have secured far greater success for the England squad.
In just the same way, whether you are a franchisor expanding your existing business through franchising or a franchisee taking up a franchise, in order to give yourself the best chance of success you need to select the right team to assist you and you need to ensure that the individual players then play to their strengths in the right positions.
Professional advisers, and your lawyer in particular, are key members of that team with a roving midfield responsibility that extends from a vital role in attack - providing critical advice on the structure of the business for franchisors and advising franchisees on the obligations they are taking on, to an equally important defensive function - resolving disputes if and when they arise, ensuring the business is not exposed to undue risk and that it complies with relevant legislation.
Franchising is a sophisticated legal structure that involves a number of different areas of law. For this reason, and because of the very nature of franchising itself and the importance of protecting (for the benefit of all parties) the integrity of the franchisor's business system, commercial lawyers who are not experienced in advising on franchise structures are very seldom as well placed to provide the advice required in the way as a British Franchise Association (bfa) accredited lawyer will be.
The bfa does not accredit lawyers and law firms lightly. It requires that they are recognised by their peers as having extensive experience in acting for both franchisors and franchisees and advising on franchise structures and related documentation. Once accredited they are listed on, and their details are obtainable from, the bfa website.
Choosing a lawyer without that expertise can be extremely costly. The most common complaint is when, for example, the (often highly competent) general commercial lawyer approaches a franchise matter as if it was a conventional commercial transaction. He or she insists upon attempting to redraft the entire franchise agreement and to propose extensive amendments in a misguided attempt to improve the deal for his/her client as franchisee. The franchisor will never accept them and the franchisee incurs a substantial bill to no benefit. Often the franchisee is put off altogether by a lawyer who fails to appreciate the nature of the franchise relationship and the reasons for the inclusion of particular provisions and thus suggests that the agreement is unacceptably one-sided.
Legal Advice for Franchisees:
Many bfa accredited lawyers will provide a fixed fee report for franchisees on the franchise agreement and related documentation. This will identify points of which the franchisee should take particular note, explain the reasons for the inclusion of restrictive terms and if necessary indicate matters requiring further investigation by enquiry of the franchisor. Such reports can usually be provided within a few days and provide a highly efficient and cost-effective solution to the franchisee's need for legal advice. Most importantly they ensure that the franchisee fully understands the obligations being taken on under the agreement. This can avoid disputes arising at a later date.
Legal Solutions for Franchisors:
On the other hand, for franchisors an experienced bfa lawyer is able to advise on alternative structures most appropriate to the development of the particular business in question and prepare the relevant documents. The more pro-active and dynamic of such lawyers will have developed a range of pragmatic solutions and streamlined procedures to assist the franchisor in ensuring that its franchisees comply with relevant employment, data protection, health and safety, property and other legislation relevant to all businesses today.
By way of example Leathes Prior has developed in 'Employmentor' and 'Data Protector' employee management and data protection compliance manuals that can be 'bolted' into the franchisor's operations manual and thus provide franchisees with standard form documents, procedural flow charts and ongoing advice. These are provided on a subscription basis and are not costly. It also has tried and tested procedures for streamlining franchised business property transactions to keep down the costs and speed up completion.
Team Selection - Choosing your Lawyer:
Even among bfa lawyers, however, there is a considerable diversity and clients will need to select for their team the 'player'/lawyer/law firm that best meets their requirements. Certainly both franchisors and franchisees should look for the selected firm to have the ability to provide a full range of services covering employment, property, commercial, corporate and dispute resolution advice.
With modern communication (and as with Premiership football) geography has all but ceased to be a determining factor in selection of the professional advisory 'team'. There are so many franchising events at which franchisors regularly encounter their professional advisors and the need for face-to-face meetings having been superseded by electronic contact that most bfa firms find themselves acting for wide client bases both in terms of types of business and as regards their locations.
Many of the larger companies which decide to franchise parts of their businesses will retain their existing legal players in their professional team to continue to advise on corporate and commercial issues whilst bringing on a new striker by instructing bfa franchise lawyers to advise on their franchise. This ensures they have the expertise they require for the new venture (or match) to complement their existing advisors.
So for those involved in managing franchised businesses (whether as franchisor or franchisee), consider yourself as a football manager. If you want to get the best results you must have access to the best advice. To get that you need to select the right team with the best key players. They need not be the most expensive (nor, as the world cup proved, the most celebrated) but they do need to have the necessary experience to fully understand the relevant issues and provide pragmatic commercial solutions. Among the bfa affiliated law firms you will find what you require. Talk to them (they are very approachable) take their advice and start scoring goals and winning matches for your business.