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Your responsibilities as a company director

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Aside from the obvious duties, such as filing reports at Companies House, there are numerous other duties and liabilities all directors should know about.

If you fail to comply with your duties your position on the board may be under threat, as you can be held liable by the company and in some circumstances by minority shareholders. In the most serious of cases directors may be disqualified or face criminal sanctions. 

The duty to avoid conflicts of interest

A director must avoid a situation in which they have a direct or indirect interest that may conflict with the interests of the company. This duty is extremely broad, extending to situations where any information or opportunity available to the director is exploited for their own benefit. The liability of the director who breaches this duty is severe: they will be personally liable to account to the company for any profits or benefit they have received as a result of the breach. The conflict of duty may be breached even in situations where there has been no actual loss caused to the company, it continues after a director has resigned.

The easiest way to avoid liability for a conflict of interest is to obtain advance authorisation from the company for any proposed activity, unless the articles of association prohibit them. Directors who have a personal interest in a proposed transaction can avoid liability by declaring their interest in advance.

There is a defence relating to unforeseeable conflicts, where ‘the situation cannot reasonably be regarded as being likely to give rise to a conflict of interest’.

The duty not to accept benefits from third parties

A director must not accept a benefit from a third party that arises as a result of being, or doing anything as, a director. Such benefits commonly occur as a ‘commission’ paid to the director personally whilst the director is in the process of negotiating a business transaction on the company’s behalf.

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Franchise contracts: what to look out for Part 2

AmyL
Franchise law specialist Amy Leite's latest article on WorkingMums.co.uk looks at key terms to be aware of, regarding renewal and franchisor obligations, in a franchise agreement contract.
 
Franchise law specialist Amy Leite is currently writing a series of articles for WorkingMums.co.uk, a leading job and community website for professional working mothers and fathers.

Her last article focussed on the key franchise agreement terms of the franchise contract that franchisees should be aware of to help ensure they sign up with their eyes fully open. You can read this here. 
 
The article below continues to demystify some key terms, covering renewal and the franchisor’s initial and continuing obligations.
 

A foreword from amy

As I said previously, before you read any further, articles such as this should not be seen as a substitute for taking legal advice on the terms of your franchise agreement but more a tool to help you have a working knowledge of the terms of the franchise agreement before you have it reviewed and thereafter.

There are key franchise agreement terms you should look out for in your draft franchise agreement. We are often surprised to hear how many people do not take advice on the terms of their franchise agreement prior to signing it. Often we hear that this was because they were told it was non-negotiable or the fees for a review seemed high. In our experience, regardless of whether the franchise agreement is negotiable or not, being fully aware of what your franchise agreement means in order to take a considered commercial decision and enter the agreement with your eyes open is invaluable.

It is therefore very important that you have at least read the franchise agreement ahead of your solicitor carrying out a review for you. It is very rare that a franchise review (either by report or otherwise) would comment on every single clause of the agreement and, as you will be expected to abide by the terms, you need to be clear on what all the terms are however unimportant certain things may seem.

Renewal

When considering whether a franchise will be suitable for your needs you need to consider what your long term business goals are. Are you looking to take a franchise as an income stream to carry you through to retirement in 5 years time? or are you looking at the franchise as a long term income stream and potentially with a view to building a business up which is capable of being re-sold?

It is important to consider your strategy in light of the renewal provisions in your franchise agreement. Your franchise agreement should contain a right of renewal i.e. the right to enter into a new franchise agreement for a further term after expiry of the first 5 (or 10) year term.

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Franchise contracts: what to look out for

AmyL
Franchise law specialist Amy Leite's latest article on WorkingMums.co.uk focuses on the key terms to be aware of in a franchise agreement contract. 
 
Franchise law specialist Amy Leite is currently writing a series of articles for WorkingMums.co.uk, a leading job and community website for professional working mothers (and fathers).

She continues her series of articles this month, focussing on the key franchise agreement terms of the franchise contract that franchisees should be aware of to help ensure they sign up with their eyes fully open.

The importance of reading your contract

There are key franchise agreement terms you should look out for in your draft franchise agreement. Firstly, I need to remind you that articles such as this should not be seen as a substitute for taking legal advice on the terms of your franchise agreement. These are more of a tool to help you have a working knowledge of the terms of the franchise agreement before you have it reviewed and thereafter.

We are often surprised to hear how many people do not take advice on the terms of their franchise agreement prior to signing it. Often we hear that this was because they were told it was non-negotiable or the fees for a review seemed high. In our experience, regardless of whether the franchise agreement is negotiable or not, being fully aware of what your franchise agreement means in order to take a considered commercial decision and enter the agreement with your eyes open is invaluable.

It is therefore very important that you have at least read the franchise agreement ahead of your solicitor carrying out a review for you. It is very rare that a franchise review (either by report or otherwise) would comment on every single clause of the agreement and, as you will be expected to abide by the terms, you need to be clear on what all the terms are however unimportant certain things may seem.

We are therefore preparing a series of articles which will cover, each time, two or three of the main clauses you need to be aware of in your franchise agreement. This first article will cover parties, the grant, territory and term.

The parties:

You need to be clear on who the parties to the franchise agreement are. The first party will be the franchisor which will almost always be a company. It is advisable to do some research at Companies House on how long the company has been going, if there are any similarly named companies and whether these are linked to the franchisor and have a look at their accounts if possible.

The second party to the franchise agreement will be the franchisee. The franchisee will either be a company or an individual person. Where the franchisee is a company there will be a third party to the franchise agreement who will be an individual who is a party to the franchise agreement for the purpose of guaranteeing all of the obligations of the company franchisee (usually they are described as the individual, principal or guarantor).

The key thing to understand is that because the franchisor is a company it will always have a limited liability status, but if you are the individual, principal or guarantor to a franchisee company you will not have limited liability status and you will be personally responsible for ensuring that the franchisee complies with their obligations under the terms of the franchise agreement. You will agree in the franchise agreement to personally guarantee the franchisee’s obligations and to indemnify the franchisor against costs and losses it suffers if the franchisee does not keep to their end of the deal. If you personally are the franchisee all of the responsibilities will be yours in any event.

Grant, Territory and Term:

The grant clause is one of the most important clauses in the franchise agreement, it sets out what the franchisee is being licensed by the franchisor to use and do during the term of the franchise agreement. It is key that you are clear on what your franchise business can do.

The franchisor will generally grant the franchisee the right to use their intellectual property, method or system (the know-how, procedures for operation of the business/provision of the services, expertise, methods of marketing etc) to operate the franchisee’s business in the territory during the term.

You should always check the definition of the “business”, “franchisee’s business” or “franchise business” so that you are clear what the business involves according to the terms of the franchise agreement. Generally, the “business”, “franchisee’s business” or “franchise business” will be limited to the provision of the defined Services and/or selling/using the defined Products or Equipment. You need to be sure that the definitions of Services and Products cover everything you believe you are entitled to do as part of the franchisee’s business as you will not be permitted to offer additional services/products without consent if they fall outside of the grant.

You should look closely at the territory you are being granted. It should be defined by a map attached as a schedule or a number of postcodes. Ensure that it is large enough to provide you with good income and look closely at the make- up of the territory – is it rural or town based and is it made up more or commercial or residential customers? Consider how this affects your target market.

You also need to be clear on what, if any, exclusivity you are being granted in respect of the territory. Is it exclusive only in terms of the franchisor not being allowed to grant third parties the right to operate in your territory or does it also expressly exclude the franchisor from operating in your territory too? Look out throughout the franchise agreement for circumstances in which your exclusivity does not apply or where it can be removed or limited, for example, in the case of national accounts or if you fail to hit any performance targets.

You must be clear that the rights you are granted by the franchisor only last for the term (the length) of the franchise agreement. Ordinarily a franchise agreement term is five or, less commonly, 10 years.

On expiry of the term if you do not renew your franchise agreement your rights under the franchise agreement will come to an end and you will no longer have a right to operate the franchisee’s business using the items the franchisor granted to you.

In the next article we will be looking at rights of renewal and the franchisor’s initial and continuing obligations.

 

More information

For more information please contact our Franchise Law Department.

For the full article on WorkingMums website click here

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Documenting a commercial tenancy

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How important is it to document a commercial tenancy? The simple answer to this question is "very!" Keeley Miller explains why.


All of the fundamental terms of a commercial tenancy are contained in the document itself, unlike residential tenancies which have a range of legislation to protect the rights and well being of the Tenant, commercial Tenants are deemed to be capable of looking after themselves and much less protection is implied for the Tenant.

Heads of Terms

All of the agreed terms should be documented right at the outset in the Heads of Terms, even if the parties are not using land agents or professional consultants to broker the deal. A lease can take several weeks to conclude and it is often necessary to refer back to heads of terms to remind the parties what was agreed at the negotiation stage.

The lease, once drafted and entered into, will deal with a range of issues such as how much rent is paid, when, to who, can the rent be increased, who insures, who repairs etc. The lease will also cover a range of more unusual circumstances such as what happens if the building burns down or there are issues with the condition of the building. If you ever ask a solicitor what happens if… in relation to a commercial lease the answer will invariably be, what does your lease say?

It is often the case that the parties are keen for the lease to be completed as soon as possible after heads of terms are agreed. I have completed a lease of part of an office building in one week but that was an exception and not the norm! It is imperative that Landlords do not allow eager Tenants into occupation until a lease has been completed, or if they do want to allow a Tenant into occupation early it is essential that they instruct their solicitor to prepare a Tenancy at Will or a Licence to Occupy which will bridge the gap between agreeing heads of terms and completing a formal lease.

Licence to Occupy

A Licence to Occupy is simply a permission granted by the Landlord to the eager Tenant and it records the extent of the Tenant's rights in relation to their use of the property. In the event the lease negotiations fail, the Landlord can simply withdraw their permission and bring the Tenants occupation to an end with the minimum of fuss.

If, in the same scenario, there was occupation by a Tenant without a written licence or a written Tenancy at Will, the Landlord may have real difficulty recovering the property quickly. Depending how the long the status quo is allowed to continue the Landlord may even inadvertently create a protected tenancy which allows the Tenant to stay in the property.

More information

It is in the interest of all parties to have the benefit of a considerate, negotiated and properly drafted agreement which removes all doubt in the event there is an issue in the future.

The Commercial Property team at Pinney Talfourd Solicitors can assist with all aspects of commercial leases. Please contact any member of my team on 01708 229 444 and we will be happy to help. Alternatively, click here to find out more about our commercial property services.
 

This article was written by Keeley MillerCommercial Property expert at Pinney Talfourd Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter.
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Landlords - at your tenant's service?

propertyspotlight
What should a landlord do if faced with a tenant not paying his or her service charges?

The landlord may well think that if the tenant is not prepared to pay then why should he or she receive the service? However, landlords are advised to think again if considering cutting off services to their tenants.

A recent High Court case, Winchester Park Ltd v Sehayak, decided that a landlord was not entitled to shut down a lift service in a building because the tenant had failed to pay his service charges.

The tenant was a leaseholder in a fairly upmarket block of flats. A dispute had arisen over the service charges and this had rumbled on for some time. The tenant was refusing to pay the service charges. The landlord thought it would be a great wheeze to “convince” the tenant to pay by shutting down the lifts which serviced the tenant’s flat. The landlord clearly believed that the prospect of climbing the stairs would be sufficient to persuade the tenant to pay.

However, the tenant had other ideas. So, eschewing the health benefits of the increased exercise he would receive from using the stairs, the tenant applied to Court for an injunction. The injunction was dealt with prior to the hearing because the landlord restored the service, but the Court still needed to decide whether the landlord was entitled to take that action in settling the issue of who paid the costs. The Court found against the landlord and determined that the landlord was wrong to stop providing the lift service.

The law in this area is complicated and even if your lease makes the provision of services conditional on payment of service charges by the tenant you may still be legally required to provide services even if the tenant doesn’t pay. It is important for landlords to seek legal advice before taking any step to cut off services to your tenant because you could end up with a significant costs order against you.


More information

The Dispute Resolution Team at Pinney Talfourd Solicitors in Essex can assist with all aspects of property litigation work. If you have any queries relating to a property litigation please contact any member of my team on 01708 229 444 and we will be happy to help. Alternatively, click here to find out more about our services.
 

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter.
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Small Business, Enterprise and Employment Act 2015

No more annual returns, simplified statements of capital... Looks at what's new in the world of company law for June 2016.
   
The latest provisions from the Small Business, Enterprise and Employment Act 2015 are due to come into effect on 30 June 2016. 

The Act is designed to improve transparency around company ownership and to tackle directors involved in misconduct. At the same time, the Government has taken the opportunity to introduce a number of company filing reforms. This simplifies the current filing requirements and should improve the accuracy and integrity of information held on the public register at Companies House.

The provisions in the Act are coming into effect in stages. Agata Rumbelow, our company commercial expert looks at the latest stage of the Act:

No More Annual Returns

Companies will no longer be required to file an Annual Return (AR01); instead they must file a Confirmation Statement once a year confirming to the Registrar of Companies that the information held at Companies House is still current. Annual Returns will not be accepted for filing after the end of the month.

The Confirmation Statement fee is the same as that currently for the Annual Return (£40 for paper and £13 for electronic filing).

Of course, information that changes in the course of the year (e.g. directors resigning or new directors being appointed) must still be notified to Companies House as they occur, as previously.
 

Statement of Capital Simplified

This is to make it clearer how much (if anything) shareholders owe the Company on unpaid shares, so that anyone using the Register to check a company’s financial health can access the information more readily.
 

Company Registers

Private companies (i.e. not PLC’s) now have the option of just recording information about directors and shareholders at Companies House without a requirement to keep separate registers at their Registered Office.
 

Register of People with Significant Control

From the end of the month, the information that companies are now required to keep on those who hold or control (directly or indirectly) more than 25% of the shares or voting rights in a company, will also have to be provided to Companies House once a year with the Confirmation Statement.

 

Find out more

If you require any further information on different types of business structure or any company and commercial law matter, contact our Company and Commercial team on 01277 246833. 

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at June 2016.
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Have you included a "purpose" in your commercial contract?

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A recent Appeal Court case confirms the importance of a contract having a clear purpose in law.   

Without a purpose, one or other of the parties may not get the benefit they were expecting from the agreement.

But how can the purpose of a contract be unclear? It should be fairly obvious you might think, especially if the parties have specified what it is. Well, not necessarily. The Judge in the leading case on this point stated "A person's purposes are almost always to some extent mixed, and the ordinary principle is that the relevant purpose is the dominant one".

In other words, Judges will make a distinction between

  •  the sole purpose
  •  the dominant purpose
  •  one of several purposes, all of varying importance.

So, it is easy to see how the parties might end up with something they did not intend, and which one or the other of them did not want.

If you have an important commercial contract in the pipeline, are you sure that you will get what you want out of it? If not, why not get it checked out by Pinney Talfourd’s experienced Company/Commercial team.

If you require any further information on different types of business structure or any company and commercial law matter, call 01277 246833. 

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at May 2016.
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Brexit and the Property Market

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The EU referendum is fast approaching with the vote due to take place on 23rd June 2016. Julien Pritchard considers what potential effect the vote will have on the property market.
 
Unless you do actually live in a cave it is reasonably hard to avoid this topic at present with many arguments being put forward by both the remain and leave camps.

Before we get started please let me state categorically that this article is not a statement either in support or against the “Brexit”. I am afraid you will have to form your own opinions on that particular issue. However, I am willing to consider the potential effect of the vote on the property market.

The simple fact is that the property market in the UK likes one thing and that is stability. The reality is that whether we as a nation vote to remain or leave we are in a period of instability. Many large organisations have considered this issue in great detail. For example, a KPMG poll of 25 global real estate investors with assets under management of over $400bn has revealed that two thirds believe a Brexit would result in less inward investment into UK property and property companies.

The estate agency Savills has warned that the UK residential and commercial investment markets are “subdued”. The Royal Institution of Chartered Surveyors has voiced a similar opinion stating that the current vote could result in “a degree of uncertainty for buyers that may negatively affect some elements of the market”.

It is recognised that general elections tend to paralyse house sales and recent research from Hamptons International and Jefferies demonstrated that property transactions tend to slow ahead of a general election. There is no reason not to think that a vote on an issue as large as Brexit will have similar effect.

Whatever the outcome of the referendum we are entering a period of uncertainty and that cannot be good for the property market. If we do leave then that period of uncertainty may be extended, however, only time will ultimately tell what the long term implications are and whether any potential short term loss is offset by a future gain.


More information

The Commercial Property Team at Pinney Talfourd Solicitors in Essex can assist with all aspects of commercial property work including refinance, sales, purchases, lettings and licences for alteration, assignment etc. If you have any queries relating to a commercial property please contact any member of my team on 01708 229 444 and we will be happy to help. Alternatively, click here to find out more about our services.
 

This article was written by Julien Pritchard, Head of the Commercial Property Department at Pinney Talfourd Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter.
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Changes to the taxation of dividends

Outlining the changes and advising on how reviewing the structure of your business could help offset some of the pain.   
 
The April budget brought about significant changes to the taxation of dividends which will affect investors, business owners and the self-employed. It is anticipated that married couples who work in family companies might be among the hardest hit and may be thousands of pounds worse off each year.

 

Who is affected by the change?

Anyone who receives more than £5,000 in dividends per year will have been affected. Limited company shareholders will face higher taxes and family-run companies, in which husband and wife both receive dividends, are likely to be significantly affected.

Business owners who pay themselves a small salary and top up their income with larger dividend payments are likely to end up paying more tax under the new rules.

Now is an ideal time to seek advice on how you will be affected and to find out whether making changes to the structure of your organisation or altering the way in which you are paid could reduce your tax bill.

 

The position before 6 April 2016

Before 6 April 2016 dividends were taxed at source at a rate of 10 per cent, which was called a tax credit. Basic rate taxpayers then paid no further tax. Higher-rate taxpayers paid 32.5 per cent tax after the deduction of the tax credit but once the 10 per cent tax credit was deducted the effective rate became 25 per cent. For additional rate taxpayers, the rate was 37.5 per cent, which produced an effective rate of 30.6 per cent after the deduction of the tax credit.

 

6 April 2016 changes

After 6 April 2016 the national 10 per cent tax credit will be abolished. Anyone receiving dividend income above £5,000 will be subject to a higher tax rate.

 2015/2016 tax year2016/2017 tax year
Basic rate tax (20%)0%7.5%
Higher rate tax (40%)25%32.5%
Additional rate tax (45%)30.6%38.1%

 


Why have the changes been brought in?

These changes are designed to tax small companies that pay small salaries and much larger dividends. This is a popular way for business owners to pay themselves since it has the effect of preserving the entitlement to the basic state pension while reducing national insurance costs.

 

Winners and losers

As with most changes in taxation there are winners and losers, but small business owners and the self-employed need to be aware that they could be significantly worse off.

For example, higher earners who receive income from company shares outside an ISA up to £5,000 will pay nothing in tax as of the next financial year, but in 2015/2016 would owe £1,250 in tax. However, if as a higher earner you currently pay yourself more than £21,667 in dividends per year you will be worse off than before.

If you are a basic rate taxpayer who receives dividends of more than £5,001 you will need to complete a self-assessment tax return starting from the tax year 2016/2017.

 

What are your options?

Given the complicated nature of the rules, a review of your business profile could reveal whether a change to your company structure would help you to save money.

Some business owners may consider that share splitting, that is, subdividing shares so that their individual value is diminished, or else distributing income could be advantageous at this time.

Contractors who operate from limited companies may simply adopt a policy of retaining profit within the company until such time as they decide to close it down, since profits remain subject to the same 20 per cent corporation tax as before. Any money drawn from the company from April 2016 will be caught by the new rules, however, and subject to this new taxation.

If you do not currently have a pension or are paying for it out of your net income, now might be the time to set up a limited company pension. Profits can be transferred into a pension, thus avoiding corporation tax as well as dividend taxes to which you would be subject if you were to draw the income personally.

If you are able to bring your spouse into your company, they can be used to absorb unused personal allowances. The level of pay has to be reasonable and they must be seen to do some tangible work but it is important to note that the company will receive tax relief for this cost. If this is within the personal allowance there is of course no income tax payable on this.

A review of your business structure will involve your accountant. Pinney Talfourd will assist in preparing the legal documentation required to put any recommended changes into effect.

If you require any further information on different types of business structure or any company and commercial law matter, call 01277 246833. 


The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at May 2016.
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What to ask a franchisor when buying a franchise

AmyL
Amy Leite provides regular franchise law advice on WorkingMums.co.uk. Her latest article focuses on what to ask a franchisor when buying a franchise.
 
Amy Leite is a solicitor at Pinney Talfourd Solicitors in Essex. She has specialised in franchise law for many years and shares her expert legal knowledge with WorkingMums.co.uk readers who are looking into buying a franchise.

"The most important tip is not to be afraid to ask the franchisor difficult questions", says Amy "these will undoubtedly form part of your decision-making process. If the franchisor can’t or won’t answer them you should think very hard about whether you really want to be tied in to a five-year agreement with that franchisor."

What is my commitment?

You need to know from the start exactly what your commitment is. Is the franchise agreement for a term of five years or more or less? And what are your commitments in terms of opening hours/ business hours? Can you carry out the business part time or is it strictly a full time (and potentially more) business? Some franchisors will tell you it is up to you how many hours you put in, but you must check the franchise agreement and/ or operations manual which often stipulate the minimum business hours. Also consider the amount of admin/ back office work you will be required to do and add this on to your time commitment each day. Try to find out how much back office assistance you get from the franchisor (if any) so do they centrally invoice for example or do they offer a calls line to cut down your admin time?

What support am I going to get from you?

You need to know and understand exactly what it is you will be receiving from the franchisor on an ongoing basis. Ask them what they provide i.e. will they negotiate the best deals for franchisee’s from third party product suppliers, do they provide a central telephone enquiry line, do they pass on leads and if so within what timeframe, what advertising and promotion of the business will they do independently of your own obligations? Once you have a detailed and specific list of what you are actually receiving by way of support, assistance and guidance ensure this is set out in the franchisor’s obligations under the franchise agreement. If the franchisor’s obligations are vague and do not specify any of these things you will not be able to force the franchisor to provide these things.

How many franchises have not worked out and why?

Do not be afraid to ask if there have been any franchise failures. These things happen and a good franchisor will be open and honest with you about any franchises that haven’t worked out and the reasons why. You need to know whether there has have been a high turnover of franchisees, why this was and what the franchisor did about this. Ask the franchisor if they have been required to take legal action against any ex-franchisees and for the circumstances. This will help you work out what they do to protect the franchise network from ex-franchisees.

How many franchisees have been able to re-sell their franchise business?

If your strategy is to buy a franchise that you can build up, have an income stream from and then potentially re-sell at a later stage you need to know whether this particular franchise re-sells easily or at all. Find out how many have been re-sold, at what price and how long they were part of the network and how long the businesses were up for sale. This is all key information you will need to know to plan your future within the network.

How many franchisees do you currently have and can I speak to them all?

A franchisor should be willing to provide you with a full list of franchisees who you can speak to about the opportunity. You can then pick from the list a few franchisees who are a few months into their franchise to see what support on setting up they have received and how things are going, a few who are mid-term again to see how they have found things and any tips and a few people who are nearing the end of their term and who have renewed their agreements. This will give you a good spread of people and hopefully you will receive a balanced view of the network. If a franchisor is selecting one or two franchisees that they are willing for you to speak to you should exercise caution and ask to pick your own franchisees to speak to.

Do these cash flows include all the franchise expenditure or is anything missing and whose figures have these been taken from?

More often than not you will be provided with cash flows/projections on what you could/may/might earn whilst a franchisee. You need to be absolutely clear on what the figures show, where the figures came from and that they are showing the full picture. Ask the franchisor whether they are from an existing franchisee and, if so, in what territory. Bear in mind the dynamics of different territories – London figures are highly unlikely to be the same as a town in Yorkshire. Find out whether the franchisee whose figures have been used in the cash flows has any expenditure which is not included and where this particular franchisee sits in the performance of the network – if they are the top performer in the network ask for a mid and lower end performer’s figures. If they are an average across the network dig deeper into how many franchisees figures were used and when the average was taken (think about this if your business is seasonal).

If they are not franchisee figures then whose are they and where have they come from? Ask if there are any circumstances where expenditure may be more – think about staffing and if you need assets such as equipment/vehicles that the other franchisee/figures have excluded. You must remember at all times that the figures given will contain non-reliance statements which try to seek to prevent you relying on them as will the franchise agreement. The franchise agreement may even go as far to say you have not been given any cash flows. If anything is particularly important to you on those cash flows i.e. that they contain all of the expenditure required ask the franchisor to confirm that fact in a side letter attaching the cash flows.


Ask everything possible about the model and what the franchisor’s future plans are?

Find out what the franchisor has in mind over the next one, two, five and 10 years. Are they looking to stay in this business indefinitely, are they developing any new systems, methods, products or services? What marketing campaigns and future plans for growth do they have? These matters are not binding on the franchisor, but at least you will know before you sign up an insight into their plans. Look at how passionate and excited they are about driving the franchise forward and consider how this will help you.

It is absolutely imperative you understand exactly how every aspect of the business works. You should be able to explain to your lawyer how the business works and how that fits with what is in the franchise agreement when asked. If there is anything you don’t know, no matter how small you need to find out.

Finally…
Don’t be afraid to ask all the questions that occur to you and are important to you. The franchisor’s reactions will give a good insight into what you can expect from your franchise relationship.
 

More information

For more information please contact our Franchise Law Department

For the full article on WorkingMums website click here

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2016 and the commercial property market

Julien-Pritchard
Head of Commercial Property, Julien Pritchard, provides a snapshot of what lies ahead for commercial property clients.


A look back at 2015

2015 was, by all accounts, a good year for commercial property with a good level of recovery in the rental market.

Unsurprisingly central London offices have led the upswing. However, several areas including Brighton, Bristol, Cambridge, Manchester, Leeds and Oxford have also seen a healthy increase in office rents. Industrial rents have also risen in many locations, fuelled in part by growing demand from online retailers and parcel couriers. Retail has not fared as well. Again London and popular tourist locations continue to perform but outside of those hotspots the retail world is still adjusting to a shift in consumer spending habits.

2016 looks positive for the commercial property market

There is a general feeling of optimism for the coming year. There is a consensus that UK GDP will grow by 2.25 to 2.5% through 2016 to 2017 and this can only be good for the markets. It is still far from simple to obtain finance on commercial development sites and with many sites being snapped up for residential development the supply of new commercial sites may decrease which should increase the demand/ rental costs for existing commercial units.

The mantra “location location location” is as true for commercial property as it is for the residential sector and the right space, in the right place with the right infrastructure and services should garner good returns for commercial property investors. Prudent landlords may well consider spending their hard earned money on refurbishing existing space to make it more attractive to tenants and securing a higher income per unit rather than investing in additional secondary or tertiary space.

Are you moving in 2016?

The Commercial Property Team at Pinney Talfourd Solicitors in Essex can assist with all aspects of commercial property work including refinance, sales, purchases, lettings and licences for alteration, assignment etc. If you have any queries relating to a commercial property please contact any member of my team on 01708 229 444 and we will be happy to help. Alternatively, click here to find out more about our services.
 


This article was written by Julien Pritchard, Head of the Commercial Property Department at Pinney Talfourd Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at January 2015.
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