Whether you are planning to take up a franchise or to franchise your business in Singapore, Yuen Law team of lawyers can help maximise the success of the next step of your business expansion. Our lawyers provide big-picture strategic legal guidance as well as provide you with insights into the nitty gritty details of the terms and conditions of a franchise agreement, so everything is covered.
Buying a franchise
In the process of purchasing a master franchise or single unit franchise, it is important to be aware that franchisors may not always be open to negotiating the terms within the franchise agreement, particularly in the case of larger or well-established franchises. Yuen Law can provide you with reviews at the appropriate level, such as specific clause reviews, red flag reviews as well as full blown reviews of the franchise terms and conditions.
Through our reviews we can help you determine the implications of the terms, clarify your acceptance of them, and work out likely operational and financial viability with you. Our reviews will also you understand in detail what your rights and obligations are as per the agreement, and to propose amendments that make business sense for you, yet acceptable to the franchisor.
When you buy a franchise, what you are really buying are the pre-existing assets and advantages belonging to that franchise, such as intellectual property (IP), goodwill, proprietary information, confidential information as well as know-how (technical or otherwise) and economies of scale for supply. You should be able to start and operate a franchised business with minimal effort, otherwise it won’t make sense to pay the franchise fees.
Yuen Law can help you conduct due diligence on the franchisor’s business model to determine the business case of taking up the franchise. This is especially important as Singapore has no specific franchising laws compelling the franchisor to make specific disclosures about their offerings.
A critical enquiry is the ways in which you may exit a franchising arrangement. Nothing is permanent and business conditions may change or you decide there are better things to do and want to exit the franchise. All the same, the franchisor may also plan for other things and want to end the relationship.
A properly drafted franchise agreement should have provided for contractual exits. These exits are intended to allow for an orderly exit from the franchising arrangement and failure to do so may lead to disputes and costly litigation. We can help you prevent this.
Franchising your business
Your business is a success and has grown steadily or explosively. Your business has a recognised brand that creates loyal customers. You’re wondering if creating a franchise might be the ideal vehicle for your business expansion.
A franchise is a licensing relationship in which you, as the franchise owner, grants a third party the license to do business using your intellectual property and goodwill. Frequently this includes the right of the third party to use your brand, sell your goods, use specific technologies that you own, and other intangibles such as systems, methodologies, and cultural assets.
To successfully franchise your business, you need to put in place strong and defensible protection of your intellectual property. Yuen Law has the full suite of services you will need for the franchise exercise. For starters we can help you ringfence your IP rights when you consult our service offering on Registration of Trade Marks, and Registered Designs. You should do this before proceeding any further in the franchising journey.
If you are planning an overseas expansion through the franchising model, note that different countries have different laws governing the setup and operation of franchises. Yuen Law can help you navigate this labyrinth or regulations, and on setting up structures overseas to manage franchisees, as well as how to plan taxes efficiently.
It is helpful to know that Enterprise Singapore provides support to businesses looking to expand into new overseas markets. This support comes in the form of the Market Readiness Assistance (MRA) Grant. The MRA grant can cover the third-party costs associated with identifying potential licensees or franchisees.
As a franchisor, it’s important to focus on exit strategies, both your own and your franchisees. Change is the only constant, and it is prudent to provide multiple exit pathways for all parties, that both make business sense and protect your core interests. This makes a key difference in downstream dispute resolution and avoidance with your franchisees.
Yuen Law has been named one of Singapore’s Best Law Firms 2021 by The Straits Times for its expertise in Intellectual Property Law. Our lawyers pride themselves as business problem solvers, and are passionate about helping emerging businesses expand their footprint through licensing and franchising. Contact our intellectual property (IP) lawyers to give you the best possible start to your business expansion and franchise. Please contact us to schedule an appointment.
