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What restrictions will a franchisor place on the business I run?
There will be a huge number of restrictions, because franchising is about the franchisor developing systems and requiring franchisees to work strictly to those systems. There are a number of reasons for that.
The first is that the franchisor will have established that compliance with its systems means franchisees will have a successful business. Secondly, it’s important customers know that whenever they make use of a franchised outlet, the products and services are provided in a consistent way.
This means that, in practice, the franchisor will regulate all aspects of the business, both through provisions in the franchise agreement and in the operating manual, which tells franchisees how to operate their businesses.
The franchise agreement will require full compliance with the operations manual and will make a failure to do so a breach of the franchise agreement. The franchise agreement itself will concentrate on the most important restrictions and obligations and will deal with ensuring franchisees devote their whole time and attention to the business, may include provisions concerning pricing, deal with a franchisee’s use of the internet and so on.
John Pratt is senior partner at specialist franchise firm Hamilton Pratt and has advised franchisors for over 25 years.
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