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Franchise News - Article
29.06.2009
The franchisor’s obligations
Franchising has many advantages; on the other hand, it imposes many obligations to both franchisors and franchisees, as in any close collaboration.
The franchisor’s obligations are to provide the elements recognized by the clientele (brand name for instance), to provide a concept, to transfer a certain know-how, and to provide constant assistance.
No one can be a franchisor if he does not own a brand name, and transfer this brand name to his franchisees. Thus, it is the franchisor’s responsibility to react against counterfeit.
Know how is at the heart of franchising. Without it, there would be no such thing as a franchise. This know how is precisely defined in the 1988 community regulation. It must be a set of non-patented practical information resulting from the franchisor’s experience, and tested by him. The whole must be substantial, identified and secret.
Technical assistance starts when the contract is signed. It can have many forms: continuous training of the franchisee and his staff, engineering services, boutique fitting out and product selection, advertising campaigns planning, legal consultation, set up of a legal department to the whole network, set up of a logistics hub, providing income statement model…
Territorial exclusivity is not an obligation. Nevertheless, it is expected to appear in most of the franchise contracts. This clause allows the franchisor to develop his business calmly since it ensures that neither the franchisor not the other franchisees will try to sell the same products than the ones he sells in his limited territory.
We should note that the initially defined territorial limits can evolve (often shrink) depending on the franchisor’s commercial strategy, his reputation, and his clientele.
Bruno Place and Jean Samper
AC Franchise
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