Franchising in the food and drink sector
In recent news, the Little Giant Brewery has launched the world’s first micro-brewery franchise. With businesses such as McDonalds, Costa Coffee and Pizza Hut selling franchises, you may be thinking of entering into the food and drink franchise market yourself.
“Franchising” is when one person or business (the “franchisor”) grants a licence to another (the “franchisee”), allowing the franchisee to trade under the brand of the franchisor.
The franchisee owns and operates their franchise(s) and follow (and profit from) the franchisor’s proven business model. From day one the franchisee benefits from an established name and brand.
The franchisor will normally enter into an individual franchise agreement with each franchisee. Common points to think about when entering into discussions are:
- what level of influence and control will the franchisor have over the franchisee’s business?
- what will the franchisee be required to perform?
- what level of support or training will the franchisor give?
- what kind of advertising will the franchisor undertake?
- will the franchisee have exclusive or non-exclusive rights in a particular territory?
- how long will the arrangement last for (usually 5 years), and is there an option for renewal?
A big benefit to operating a franchise is that the burden of advertising is shared. The franchisor will often undertake national advertising, releasing pressure from the independent franchisee, subject to the franchisee paying an advertising fee.
Different codes and legislation need to be considered when advertising online or if you choose to broadcast or what intellectual property rights or trademarks the franchisor holds and how this interferes with your running of the franchise.
There is no specific legislation which regulates franchising in the UK. The British Franchise Association (of which we are an affiliated member) and the Approved Franchise Association are membership organisations which help promote ethical franchising and provide information and advice to franchise businesses.
Get in touch
If you have any queries regarding anything touched on in this article, or if you would like further information, please contact Daisy Divoka or give us a call on 0345 070 6000.
Disclaimer: The purpose of this note it to provide a brief overview as to what is a franchise. It is not intended as legal advice and, in the case of specific problems, we recommend professional advice be sought.