Writing a Franchise Agreement: Why Choose a Franchise Lawyer?

Having your franchise agreement drafted by a specialist lawyer means giving yourself a good chance of building a sustainable network!

We have produced a motion design video to illustrate the consequences of a poorly drafted contract on a franchise network.

Mr. Dupont wants to become a franchisor, he has developed a concept that works well and several people have approached him to reproduce his concept. He uploads a standard franchise agreement to the web and has it reviewed by a lawyer who usually deals with these corporate rights issues. Soon, his network has many franchisees who all source from him.

Mr. Durand, a franchisee, stops paying his royalties and chooses to source from another supplier. He created a sign with a logo and a name, similar to Mr. Dupont’s sign. He uses everything he has learned from Mr. Dupont’s network: sales techniques, product presentation and keeps the same arrangements.
Mr. Dupont is unable to stop the use of his concept by the franchisee because the franchise agreement is not suitable.
The ex-franchisee builds his own franchise network on the same model. Many franchisees in Mr. Dupont’s network join the new network of the ex-franchisee by ceasing to pay their royalties with impunity. Mr. Dupont’s network is bankrupt.

If Mr. Dupont had come to see Gouache Avocats…

Gouache Avocats is a firm specializing in distribution law. He is asked to draft or review many franchise agreements each year. The drafting of the contract begins with a long discussion on the organisation of the future network. The firm also protects essential data without which franchisees cannot be autonomous, such as the brand or concept. The contract is custom drafted and designed as a reflection of the organization desired by the franchisor. From the first unpaid amounts, the franchisor has the means to demand the payment of royalties, to terminate the franchise agreement and the cessation of the use of the concept.

The former franchisee’s sign must be changed, specific fixtures must be returned or destroyed. The fastest enforcement channels can be implemented to obtain payment for goods and royalties. Other franchisees are not tempted to leave the network under the same conditions.
The franchisee cannot copy the concept of his former franchisor and even less set up a competing network on the same basis.

When you have the ambition to create a network and you use a bad contract, you make the network extremely fragile. The slightest breach in this contract can be exploited by all franchisees and multiply the risks of network destabilization. Choosing a lawyer who practices daily the drafting of distribution contracts and the litigation of these contracts, is giving yourself every chance to build a sustainable network.