Franchising

Posted by admin at February 11, 2014

Category: News

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I received an inquiry from a reader who kindly made me think about a possibility I have not commented. With the crisis, many people ask to start a business for yourself, and you may find interesting possibility is to set up a franchise. How does the franchise system? What should we consider? Franchising is a business collaboration system in which the franchisor grants the franchisee a number of areas (marketing system itself, use of the brand, know how or know-how, technical assistance, etc.). In return, the franchisee usually pays an initial fee and a royalty or monthly fee for management services it provides and it is also usually a fee for advertising. The franchise is extensively regulated by different rules, since there is an European Franchise Code, applicable in Spain, is contained in Regulation 408/88 of the European Commission, in Article 85.3 and in Spain in Article 62 the Retail Trade Act and various Supreme Court rulings.

These legal guarantees mean that the franchisor must be registered in a Register of Franchisors, under the Ministry of Industry. It should also provide pre-contractual information to the franchisee, which together with details of the franchisor and accreditation have in place the ownership of the brand. It should also describe the business, the experience of the company and its evolution, the characteristics of know how you will convey to the franchisee and what technical assistance it will provide, and many other elements of contracts, such as duration, conditions resolution and renewal, economic considerations, exclusive dealing and possible limitations that may be in managing the business.

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