FRANCHISING
Franchising is a business model that companies use as an efficient way to grow their business, to tap on the local market of foreign franchisees, and to raise capital.
It involves the buying and selling of a business’s IP, including the license to use its trademarks and the franchisor’s know-how. It is also a strategic alliance between groups of companies that allows the companies to share a brand identification, a successful method of doing business, and a marketing and distribution system.
A franchising agreement involves the negotiation of various essential terms, including royalty payments, non-competition terms, representations and warranties, and events of termination.
Our teams of corporate and commercial lawyers are able to advise clients on corporate matters and their franchising agreements, including:
- The type of entity to form where a franchisor company is considering forming a new entity to offer franchises,
- How the entity can be organized
- Required documentation to effect such incorporation.
- Franchise agreement negotiation
- Drafting and review of franchise agreement
- Tax advice on royalty payments
- Any other relevant local regulatory law in setting up and operating the franchise
In Singapore, there are no specific franchising laws in relation to the specific disclosures about the franchise itself. We also assist our clients with conducting due diligence in this area before entering into franchise negotiations.
In addition to our advising on laws and regulations that are relevant to the franchising, we often advise clients on trademark and other IP issues as well. Franchising almost always involves the licensing of IP such as trademarks, trade secrets and the franchisor’s know-how in relation to the operations of its business, its recipes where the franchisor is a restaurant, and other business methods which are protected by IP. When drafting and negotiating a franchise agreement, our corporate team ensures that our IP lawyers and professionals are involved in the process to provide assistance so that the interests of our clients in relation to their IP are well-protected.
A franchise is a complex business model that spans across many stages and across various aspects of corporate and IP law. Consult us for advice if your business is thinking of entering into a franchise.
