Franchise Solicitor: Help with disputes and agreements
Do I really need a franchise lawyer?
Being the owner of a franchise business can be an attractive proposition, but it can bring problems too – especially as you try to balance your autonomy with the overriding direction of the brand itself. The risk of franchise litigation is a real one and needs to be kept in mind.
Unlike many countries, the UK does not have specific laws to deal with franchise regulation: they come under the same governance as other businesses.
This means if you are a prospective franchisee, you must be very careful to document the rights and obligations of all parties before signing on the dotted line. You also need to make sure that the franchisor keeps their word about how your business will be run.
Franchise solicitors ensure that franchise relationships are established, maintained and terminated in a fair, legal and ethical manner. A franchise solicitor provides legal services, such as advice and support for individuals and businesses involved in franchising.
Their responsibilities can include reviewing and drafting franchise agreements and franchise operations manuals, providing guidance on franchise laws and regulations, handling disputes between franchisors and franchisees, and providing legal advice on various other legal matters related to franchising such as the sale of franchised businesses.
Help with franchise agreements
A franchise solicitor can help with franchise agreements by providing the following services:
- Reviewing and drafting the franchise agreement: The solicitor will review the franchise agreement to ensure it is legally compliant and protects the interests of both the franchisor and franchisee.
- Negotiating terms: The solicitor can negotiate the terms of the franchise agreement on behalf of their client to ensure they are fair and reasonable.
- Advising on obligations and restrictions: The solicitor will advise the franchisee on their obligations and restrictions under the agreement and help them understand their rights.
- Ensuring compliance with franchise laws: A franchise solicitor will make sure the franchise agreement complies with relevant franchise laws and regulations.
- Providing guidance on termination: The solicitor can provide guidance on the conditions and procedures for termination of the franchise agreement.
Franchise disputes in England typically arise from disagreements between franchisors and franchisees over a wide range of issues such as territory, marketing, royalty fees, and termination of the franchise agreement. Disputes can also arise between the franchise and franchise clients, and other third parties. Some common causes of franchise disputes include:
- Breaches of the franchise agreement
- Misrepresentation by either party
- Failure to provide adequate support or training
- Interference with the franchisee’s business
- Unreasonable fee increases or changes to the franchise system.
- Trade mark disputes
- Commercial property disputes
- Intellectual property disputes
- Restrictive covenant and competition law disputes
These disputes can be resolved through negotiation, mediation, or litigation in the courts. The outcome of the dispute often depends on the terms of the franchise network agreement and applicable laws and regulations.
Remedies for franchise disputes
Resolving a franchise dispute is not always easy. A resolution may be determined during mediation, negotiations, or through use of litigation. Remedies for a franchise dispute can include the following:
- Termination of the Franchise Agreement: If the dispute cannot be resolved, either party may choose to terminate the agreement.
- Injunctions: The court can issue an injunction to prevent one party from taking a specific action or to require a party to perform an obligation under the agreement.
- Damages: The court can award damages to a party if they have suffered loss or harm as a result of a breach of the franchise agreement.
How much does a franchise solicitor cost?
The cost of a franchise solicitor in varies depending on the complexity of the matter, the solicitor’s level of experience, and location. A franchise solicitor may work on a fixed fee or hourly rates basis. Some solicitors may opt to work on an alternative funding model, such as a no win no fee agreement or a damages based agreement.
Funding franchise disputes
Franchise disputes can result in high levels of legal costs. Fortunately, there are funding and insurance options available to help you conduct litigation in a cost effective manner.
Third party funding
One funding method that is commonly used for franchise disputes is third party funding. Third party funding acts as a form of non-recourse financing for litigation.
Third-party funding refers to the financing of litigation or arbitration by a third party, such as a litigation funding company, that is not a party to the dispute but provides financial support in exchange for a portion of the proceeds if the case is successful.
This type of funding allows individuals or companies to pursue legal action that they might otherwise be unable to afford. The third-party funder assumes the financial risk of the case in return for a share of the potential award or settlement.
Damages based agreement
A damages based agreement (DBA), also known as a contingency fee agreement. Contingency fee agreements refer to a type of fee arrangement between a client and a solicitor where the solicitor agrees to take on a case on the condition that the fee will be a percentage of any compensation or damages recovered, rather than an hourly rate or fixed fee.
If the case is unsuccessful, the client typically does not have to pay the lawyer anything. In some circumstances, however, fees for Counsel and other disbursements may still be payable by the client.
This type of arrangement can make legal representation more accessible to individuals or companies who may not be able to afford traditional legal fees. However, contingency fee agreements are not permitted in all types of legal cases and are subject to certain regulations and limitations.
After the event (ATE) legal expenses insurance is taken out after the event that has led to a dispute has taken place to protect you in the case of your claim being unsuccessful. ATE insurance can protect you from paying your opponent’s legal costs, should your claim not be successful.
However, ATE insurance is not free, and it is important to remember that if your case is successful, you may have to use some of your damages to pay the cost of the insurance premium, which will be included in the terms and conditions.
The use of third-party litigation funding, CFAs and ATE insurance can sound complicated, but they are simply risk management tools and when used correctly, they can make all the difference to a franchise dispute.
How can Annecto Legal assist?
Are you worried that taking legal advice on a franchise matter could be too expensive? Or that speaking to a lawyer will escalate matters?
Getting the right advice early, and without spending lots on legal fees, is the best way to save money and protect your position.
Annecto Legal helps clients realise the value of their franchise disputes. We work closely with litigation funders, insurers and franchise solicitors that seek alternatives to the traditional hourly rate funding model.
Annecto Legal Ltd, 106 Kennedy Building, Murray Street, Manchester , M4 6HS
0800 612 6587