Franchisors are increasingly participating in the business of the
\n franchisee. There are several advantages to consider for both the
\n franchisee as the franchisor. However, there are also several
\n legal subjects that are not always clearly visible. At the
\n setting up such a participation construction is important for both
\n franchisee as franchisor to understand the legal merits.<\/p>\n
\n The reasons for a franchisee to participate by the
\n franchisor in the franchise business may be located
\n in the fact that external financing is difficult to obtain. For the
\n franchisor it can be an instrument to accelerate expansion
\n and to exert additional control and influence on the operation by
\n the franchisor. There is also an incentive for the franchisor
\n created to prevent the exploitation from failing.\n<\/p>\n
\n In the case of participation by the franchisor in the business of the
\n franchisee, however, a lot of legal matters have to be arranged.
\n Often more is agreed than a simple agreement of
\n loan. It is important how the participation is shaped. So can the
\n franchisor to acquire shares in the franchisee’s business.
\n The intention may be that the franchisee borrows the money from the
\n franchisor pays off as quickly as possible and, as it were, grows into its own
\n franchise company, so that the franchisor is ultimately not a participant
\n is more and the franchisee is “stands on its own two feet”. Not always there
\n thought about the possibility that the law offers to different species
\n to issue shares, for example with different control rights,
\n or with various claims to the profit. The law provides a whole here
\n range of possibilities to make cooperation within the BV as flexible as possible
\n to make possible.\n<\/p>\n
\n The possible flexibility requires that there should be clarity about the
\n different aspects of participation. The franchisor wishes
\n for example control in the franchise company to keep a grip on
\n the money lent. When and how should the (borrowed) money be
\n issued and is permission required from the franchisor? This is
\n particularly important if the loan from the franchisor would be repaid first
\n must be done before investments are made, for example. Which
\n does the franchisor have collateral on getting the loan back?
\n Can the franchisor own the franchisee’s franchise business?
\n completely take over if the money lent does not follow the schedule
\n relieved? And what if the franchisor doesn’t want that? These aspects are
\n often regulated in the articles of association of the franchise company and in a
\n shareholder agreement. Where and how things are arranged matters
\n great influence on its meaning and consequences. Furthermore, account
\n to be taken into account with the aspects regulated in the franchise agreement
\n are. Doesn’t the franchisor approve his own flesh as the franchisee
\n does not comply with the franchise agreement? And the franchisee may still be a member
\n of the franchisees association as the franchisor in the
\n franchise company? Case by case the questions will
\n should be viewed.\n<\/p>\n
\n It seems that franchisor participation is becoming more and more common
\n prevents. However, it is also a source of conflict involving various
\n flats agreements should be legally established in order to do so much
\n possible conflicts.\n<\/p>\n<\/p>\n
<\/p>\n
mr. AW Dolphijn \u2013 franchise lawyer\n<\/p>\n