Giving information to Potential Franchisees: What, When, How
Set out your stall for would be franchisees through preparation of a brochure and a franchise package (information pack). But, before you do take legal advice to ensure you have franchise documentation in place to protect your business.
The process for dealing with a franchise enquiry might start with an informal telephone chat to gauge suitability for progressing to the next stage. Next, send an application form to gather financial information and glean more detail including basic name, address details etc. Send it with a friendly letter and a brochure giving a general view of the business.
If the completed application is satisfactory you will want to meet the prospective franchisee – and they you of course – possibly viewing some of your business premises.
A confidentiality agreement will need to be signed before you present your prepared franchise package and before giving operational and confidential information.
The purpose of the franchise package is to give the prospective franchisee information about the business, how the franchise would be set up and ongoing operation and details of documentation which you and the franchisee would sign. The package will include:
Information about the business:
- structure of the business/management structure
- outlet addresses
- head office contact information
- history of the business
- intellectual property e.g. trade marks, patents.
Information about the franchise:
- how the franchise process will work: e.g. franchisee signs relevant documentation, premises are sought, whether you assist in supplying equipment or supplies.
- what you expect from a franchisee
- what a franchisee can expect from you – pre-franchise launch and ongoing
- start up cost guidelines: equipment, stock, projected capital requirement etc
- turnover/profit guidelines (which need to be realistic, not overly optimistic or pessimistic)
- franchise fee information: initial fee, royalty fees, whether there is an advertising levy etc (see Step 4 of this guide)
- details of documentation that needs to be signed if going ahead.
It is essential you take legal advice before marketing your franchise, before speaking to potential franchisees and before compilation of the franchise package.
Not only will you need safeguards to protect your business you will also find that the process of working with your solicitor to get documentation drafted will help formulate how the franchise will be structured and in turn this will feed into all aspects of the franchising process from initial enquiry through to the life of the franchise.
We can help with a free checklist of points which need to be considered before a franchise agreement is drawn up and which will help you work out the framework of your franchise operation. Just call and speak to a franchise solicitor: we are happy to give initial advice without charge or obligation.