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Fitting out a franchise location is critical in establishing or refurbishing your business premises. It involves setting up or updating the premises where you will operate your business. Opening your franchise will likely involve a fit-out. This guarantees that your location looks and feels consistent with the brand’s overall image, matching other franchise stores. Additionally, it ensures have the necessary equipment to operate your business efficiently. If you run a mobile business or other franchise that does not require premises, then it is unlikely you will have fit-out requirements. This article will explain several crucial legal considerations when fitting out a franchise location.
1. Funding
Cost is crucial in determining whether a franchise opportunity is right for you. Therefore, the franchisor should be upfront about the expense of fitting out your franchise location from the start of your relationship. They may have factored this cost into the initial fee, or you might require further funds to pay for the fit-out in addition to the initial payment. You should check your franchise agreement to determine this.
2. Your Contractual Obligations
The franchise agreement should clearly outline your contractual obligations regarding your premises. Additionally, it should highlight who is responsible for fitting out the franchise location. This aspect is vital as it is one of the first significant tasks you may have when setting up your new business. You should ensure aspects such as timings, requirements, and further fit-out expectations are clear.
Sometimes, brands change their image. Therefore, it is also crucial to note whether the franchise agreement enables the franchisor to ask you to update or re-fit your premises. You should read this carefully to determine whether you will need to contribute more funds later on should the franchisor require this. For this reason, it is also essential to understand the fitting requirements even if you are purchasing an existing franchise with completed premises.
You should ensure that the fit-out complies with the franchisor’s specifications and standards as outlined in the franchise agreement. Non-compliance can result in a breach of contract or the need for costly modifications.
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3. Lease Agreements and Terms
Sometimes, franchisors handle the leasing aspect of a franchise location, and in other cases, they may own the premises. However, if you are responsible for dealing with the lease, ensure it aligns with the franchise agreement and your business goals. Understand the terms of your lease agreement, including the following:
- its duration;
- renewal options; and
- conditions for termination.
Furthermore, ensure that it aligns with the franchisor’s fit-out requirements. Its terms should enable you to carry out the necessary fit-out. The premises should also be a suitable size for you to operate your franchise business.
4. Sufficient Support
A franchise fit-out adheres to the franchisor’s brand and vision. They know how your premises should look and can help you achieve this.
The franchisor is responsible for providing you with training and ongoing support throughout the franchise agreement. The franchisor might take charge of the fit-out process. However, if you have obligations during this process, the franchisor should offer sufficient support to enable you to carry these out effectively.
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5. Contractor Agreements
If you are responsible for organising aspects of the fit-out process, ensure contractors have the necessary:
- licences;
- qualifications;
- insurance; and
- quality standards.
Carefully review any contracts with builders, designers, and other potential contractors. These contracts should include clauses for dispute resolution and warranties.
6. Intellectual Property
In addition to installing essential equipment, the fit-out will likely enable your premises to display the franchisor’s branding. You should ensure that you use the franchisor’s intellectual property, such as trade marks, in accordance with the franchisor agreement. Doing so can mitigate the risk of breach of contract. Additionally, it can protect you from additional penalties for unauthorised use.
Key Takeaways
It is crucial to consider the legal aspects of the fit-out process. They remain relevant whether you are:
- investing in a new location;
- purchasing an existing location; or
- a long-time franchisee operating from fixed premises.
A franchisor can require your business premises to be fit out according to particular specifications at the beginning of your journey or further down the line through refurbishment and updates. Whether they can do this depends on the terms of your agreement.
It is vital to refer to your franchise agreement to determine who is responsible for fitting out your franchise location. The franchisor will outline costs and your roles and responsibilities within this critical legal document. If you are to carry out parts of this process yourself, ensure that the franchisor provides sufficient support.
You should also consider aspects such as:
- fit-out costs;
- lease agreements;
- contractor agreements; and
- compliant use of intellectual property.
By carefully navigating and considering these aspects of the franchise fit-out process, you can minimise risks and ensure a smooth and compliant fit-out process for your franchise location.
Discussing aspects of this process with a lawyer can also be helpful. If you would like legal advice about fitting out a franchise location, our experienced franchise lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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