LEGAL PRACTICE COURSE
Commercial Law and Practice
Workshop 09
Topic(s):
Franchising
Learning Outcomes:
By the end of this session you will be able to:
Analyse the advantages and disadvantages of a franchising agreement in relation to your
client’s situation
Advise a client as to whether the terms of a franchising agreement have been breached
and, if so, the effect of those breaches
Analyse and apply the detailed terms of a commercial agreement in the context of a
specific factual scenario
Session Activities:
Advise a client in relation to the advantages and disadvantages of a franchising
agreement
Analyse and apply the detailed terms of a franchising agreement
Materials Attached:
Pre-Session Task, consisting of an email relating to Martin Sheen
In-Session Task, consisting of an email relating to Jilly Mop attaching a franchise
agreement
Materials provided in Session:
None
Preparation for Session:
Review your materials from Large Group 3 and Workshop 5. In particular, you should
read Part 3 of the session outline from Large Group 3.
Read Paragraph 12.4 of the Commercial manual
Skim read the attached Franchise Agreement, noting the location of provisions dealing
with:
o Franchisor’s obligations
o Franchisee’s obligations
o Termination and its consequences
o Retention of Title
Post-Session:
Review your notes from the session to consolidate your learning
docs_540831550.docx 1/30 © City, University of London 2020
, LEGAL PRACTICE COURSE
© City, University of London 2020 2/30 docs_540831550.docx
, Commercial Law and Practice
Workshop 09: Pre-Session Task
To:
From
Date: [six months prior to date of workshop]
Subject: Martin Sheen - Franchise Agreement
A new client, Martin Sheen, will be coming into the office next week to discuss his latest
business proposal. I would like you to think about the questions I have raised at the end of
this email and report back to me so that I may advise Martin accordingly.
By way of background, Martin is an experienced businessman. He has worked in the retail
industry for many years, in particular in men’s fashion. For the last 10 years he has been a
branch manager for a high street clothing retailer. Martin now feels that it is time for him to
run his own business, and he would like us to advise him in respect of a franchise
opportunity he has recently come across for providing cleaning services to people’s homes.
Martin has no experience of the cleaning industry, but says that the franchisor will provide
the necessary training. Martin will bring a copy of the draft agreement with him when he
comes in.
As I understand it from my discussion with Martin, the franchise agreement works on the
basis that for an initial fee that Martin has to pay to the franchisor, he will receive (by way of
lease) a van with the company’s logo on, cleaning equipment, uniforms and training on both
the level of cleaning service required and the business methodology to be adopted. Further
training will be given at regular intervals to Martin on how to run his franchise business. The
agreement is to last for an initial 5 year period, and Martin will have the option to extend it
after that time.
Consider: Who’s my client. What’s their role in the transaction Here are they
franchisor/franchisee
Could you please provide me with your thoughts on the following issues:
1. What are the advantages to Martin of entering into a franchise agreement?
Martin is proposing to be the franchisee.
Advantages
• Less business risk
• Less initial outlay
• Less administrative matters / expense
• Gain benefit of Franchisor’s expertise / system
-For franchisees there is a less business risk for them. Franchisor set up the business and its
well established by the time they think about having franchisees. Client can then trade on the
back of franchisors business reputation. So he is taking advantage of that. He doesn’t need
to start business from scratch as the reputation already exists.
-Less initial outlay - Although client would have to pay fee to franchisor, its typically less than
he would’ve had to have spent to set up his own company. That’s a positive in regarding
initial outlay particularly in respect of capital outlay.
-Less administrative matters and expense – client enters into an agreement with the
franchisor but he doesn’t necessarily need to go through the whole process of registering a
new company. It could be quicker (will still need legal advice) but he may be saving on other
expenses.
docs_540831550.docx 3/30 © City, University of London 2020
Commercial Law and Practice
Workshop 09
Topic(s):
Franchising
Learning Outcomes:
By the end of this session you will be able to:
Analyse the advantages and disadvantages of a franchising agreement in relation to your
client’s situation
Advise a client as to whether the terms of a franchising agreement have been breached
and, if so, the effect of those breaches
Analyse and apply the detailed terms of a commercial agreement in the context of a
specific factual scenario
Session Activities:
Advise a client in relation to the advantages and disadvantages of a franchising
agreement
Analyse and apply the detailed terms of a franchising agreement
Materials Attached:
Pre-Session Task, consisting of an email relating to Martin Sheen
In-Session Task, consisting of an email relating to Jilly Mop attaching a franchise
agreement
Materials provided in Session:
None
Preparation for Session:
Review your materials from Large Group 3 and Workshop 5. In particular, you should
read Part 3 of the session outline from Large Group 3.
Read Paragraph 12.4 of the Commercial manual
Skim read the attached Franchise Agreement, noting the location of provisions dealing
with:
o Franchisor’s obligations
o Franchisee’s obligations
o Termination and its consequences
o Retention of Title
Post-Session:
Review your notes from the session to consolidate your learning
docs_540831550.docx 1/30 © City, University of London 2020
, LEGAL PRACTICE COURSE
© City, University of London 2020 2/30 docs_540831550.docx
, Commercial Law and Practice
Workshop 09: Pre-Session Task
To:
From
Date: [six months prior to date of workshop]
Subject: Martin Sheen - Franchise Agreement
A new client, Martin Sheen, will be coming into the office next week to discuss his latest
business proposal. I would like you to think about the questions I have raised at the end of
this email and report back to me so that I may advise Martin accordingly.
By way of background, Martin is an experienced businessman. He has worked in the retail
industry for many years, in particular in men’s fashion. For the last 10 years he has been a
branch manager for a high street clothing retailer. Martin now feels that it is time for him to
run his own business, and he would like us to advise him in respect of a franchise
opportunity he has recently come across for providing cleaning services to people’s homes.
Martin has no experience of the cleaning industry, but says that the franchisor will provide
the necessary training. Martin will bring a copy of the draft agreement with him when he
comes in.
As I understand it from my discussion with Martin, the franchise agreement works on the
basis that for an initial fee that Martin has to pay to the franchisor, he will receive (by way of
lease) a van with the company’s logo on, cleaning equipment, uniforms and training on both
the level of cleaning service required and the business methodology to be adopted. Further
training will be given at regular intervals to Martin on how to run his franchise business. The
agreement is to last for an initial 5 year period, and Martin will have the option to extend it
after that time.
Consider: Who’s my client. What’s their role in the transaction Here are they
franchisor/franchisee
Could you please provide me with your thoughts on the following issues:
1. What are the advantages to Martin of entering into a franchise agreement?
Martin is proposing to be the franchisee.
Advantages
• Less business risk
• Less initial outlay
• Less administrative matters / expense
• Gain benefit of Franchisor’s expertise / system
-For franchisees there is a less business risk for them. Franchisor set up the business and its
well established by the time they think about having franchisees. Client can then trade on the
back of franchisors business reputation. So he is taking advantage of that. He doesn’t need
to start business from scratch as the reputation already exists.
-Less initial outlay - Although client would have to pay fee to franchisor, its typically less than
he would’ve had to have spent to set up his own company. That’s a positive in regarding
initial outlay particularly in respect of capital outlay.
-Less administrative matters and expense – client enters into an agreement with the
franchisor but he doesn’t necessarily need to go through the whole process of registering a
new company. It could be quicker (will still need legal advice) but he may be saving on other
expenses.
docs_540831550.docx 3/30 © City, University of London 2020
