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Introduction to the franchise for self-employed and SMEs

Introduction to the franchise for self-employed and SMEs

Published in Muy Pymes , 19 - April , 2019 abogados franquicias Overview franchises

A franchise is according to the RAE, a concession of rights of exploitation of a product, activity or commercial name, granted by a company to one or several people in a certain area.

The franchise is defined by the commercial brand that distinguishes the franchisor, a certain "know-how" (or know-how) and the training given to franchisees. In return, the franchisor receives a royalty, which may compensate the transfer of the trademark, the know-how assigned and the rate of training and advice.

The franchise is granted, in general, for a specific period and for a specific territory. It may be an exclusive or non-exclusive franchise. National or international advertising, training and other support services are commonly made available by the franchisor.

But let's focus on the franchise for freelancers and SMEs that is the issue that concerns us.

The franchise is a system of business cooperation regulated by private contract, which regulates territorial exclusivity, sales objectives, activity, purchasing policy and payment system among others and in which two parts are inetervienen:

- The franchisor, which is the company that provides the business model: brand, image, experience, manuals, processes, training, assistance ...

- The franchisee, which is the self-employed or independent company that will manage this business model in a specific area in exchange for the payment of a fee.

Tips for choosing franchise

When choosing a franchise, we must properly investigate the market and inform us of all the details, even the smallest ones. It is advisable to visit the franchisor registration website and even visit some of the most important fairs in the sector. This is the case of Expofranquicia, which takes place in May in Madrid or the International Franchise Fair, which takes place in October in Valencia. The advice is key at this point, especially if we just enter the world and be well informed is essential at this point.

With a certain degree of experience and know-how we can say that we are prepared to be selected. This process can be slow since it will not always be possible to reach our objectives and we may need several attempts to achieve it. However, once we achieve everything, it will be rolled. It is at this point, once we have been selected, we must be very careful when selecting the right location, we are not only talking about the specific city, but also about the neighborhood and the street. Once this step is sealed, we can only negotiate the contract with the franchise with the corresponding help from our lawyers.
 
Legal definition of franchise

In Spain, the legal definition of the franchise, the activity developed by this entity must be based on three assumptions:
1. The use of a common denomination or label or other intellectual or industrial property rights and a uniform presentation of the premises or means of transport covered by the contract.
2. Communication by the franchisor to the franchisee of some technical knowledge or know-how, which must be its own, substantial and unique.
3. The continuous provision by the franchisor to the franchisee of a commercial, technical assistance or both during the term of the agreement; all without prejudice to the supervisory powers that may be established contractually.

However, it should be pointed out that they will not necessarily enjoy the consideration of franchising, the commercial concession contract or exclusive distribution, for which an entrepreneur commits to acquire under certain conditions, products normally branded, to another that grants them a certain exclusivity in an area, and to resell them also under certain conditions, as well as to provide the buyers of these products with assistance once the sale has been made.

Nor shall any of the following legal relationships be considered as franchise:
1. The granting of a manufacturing license.
2. The assignment of a registered trademark for use in a certain area.
3. Technology transfer.
4. The cession of the use of a banner or commercial label.

Aspects that should appear in the contract

In a contract relating to franchises should necessarily appear the following aspects:

-Rights and obligations of the parties.
-Contract period.
-Terms of resolution and renewal.
-Economic benefits.
-Pacts of exclusivity, after having physically determined the geographical area that is going to be considered the scope of exclusive performance (without competition) of the new franchise; and to know if it has the sufficient size for the survival of the same one. The need for the prior consent of the new franchisee should also be collected in writing if the franchise wants to open new branches in the same area. In addition, the training period, its scope of application (if it is directed only to the head of the business or for the entire workforce) and the continuous training system.
 -The advertising canon.

And also, on the other hand, the privileges for seniority if there were: preference to open new branches, lower fees for them ...

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Introducción a la franquicia para autónomos y pymes
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