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Renewing a Franchise Agreement: What exactly is a renewal fee?

Posted Tuesday, January 4, 2011 in Franchise Info

Susan Friedman
Lawyer

Q What exactly is a renewal fee? Why it is necessary?

Susan says:
A renewal fee is a fee paid by a franchisee to a franchisor when the initial term of the franchise agreement is set to expire and the franchisee has chosen to exercise an option to renew the agreement for another term (or has otherwise negotiated a renewal with the franchisor). This obligation is typically called for under the franchise agreement. Renewal fees can either be a flat charge or based on a percentage of the initial franchise fee in effect at the time of renewal. Franchisors require payment of a renewal fee because they are foregoing the opportunity to sell the franchise to another person, at the full initial fee. Renewals also require a lot of administrative work by the franchisor, especially if the franchise agreement calls for the franchisee to sign the ‘then-current’ form of the agreement, with ancillary documents, on renewal. The franchisor will also incur legal fees, including having its lawyers do updated searches on the franchisee and any guarantor, prepare a new franchise package and update its disclosure document if any material change has occurred since the original franchise agreement was signed (which is very likely).

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Tags: Ask the Experts, Franchise Agreement, Susan Friedman

Does Intellectual Property Have A Place In The Kitchen?

Posted Tuesday, January 4, 2011 in Food Services, What's Going On

By Jean-Philippe Mikus

The food-service industry is as competitive a market as one will find in franchising. New concepts are always being introduced, followed promptly by a slew of imitators trying to put their own spin on a successful system.

Prospective food-service franchisees look for many things when scouting opportunities—a strong brand, replicable results, ongoing support and valuable, protected trademarks under which to do business. However, the success of a restaurant concept, be it quick- or full-service, depends largely on the food itself. Are these assets as firmly protected? A recent dispute has arisen in Quebec calls this issue into question.

A contentious case
In September 2010, a disagreement arose between a Quebec-based full-service restaurant (FSR) chain and one particular franchise of another chain, both of which specialize in breakfast fare. The accuser alleges the accused was illegally copying some of its well-known dishes. These dishes, each of which has allegedly distinct and unique names, wound up at the centre of a debate in the press over the protection of dishes as copyrighted works.

Thus far in the food-service industry, restaurant trademarks and logos have been the subject of most lawsuits before the courts. Here, however, the right to control the use of certain dishes is squarely at issue. The accuser does not accuse the accused of stealing the name, design or logos identifying the chain; rather, it is the alleged appropriation of recipes, as well as the name and visual presentation of certain dishes, that are in dispute. There are no claims of misappropriation of secrets by an employee or business partner. The dispute merely questions whether intellectual property has a place in the kitchen and dining room.

Jean-Philippe Mikus is a partner with Fasken Matineau DuMoulin LLP, based in Montreal.

Read the full article: Dishing It Out: Does intellectual property have a place in the kitchen?

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Tags: Achieving Success, Franchise Agreement, Jean-Philippe Mikus

‘Double Down’ Makes Canadian Debut

Posted Monday, January 3, 2011 in Food Services, Franchise Info

The ‘Double Down,’ the much-discussed KFC sandwich that made headlines across the U.S., was a big hit when it finally made its way north of the border this fall.
From Oct. 18 to Nov. 14 , Canadian connoisseurs could sample the unique offering, in which two fried boneless chicken breasts take the place of a traditional bun, sandwiching two pieces of bacon, pepper Jack cheese and a secret sauce. By the end of October, more than 350,000 of the sandwiches had been sold, making the Double Down the chain’s most successful new menu item ever.

“Canadians begged KFC Canada to bring the Double Down north of the border and it’s been our number-one customer service request for months,” says Dan Howe, chief marketing officer, Yum! Restaurants Canada. “It’s just been phenomenal for KFC, our customers and our franchise partners across the country.”

The sandwich generated global interest when it was launched in the U.S., where more than 10 million were sold in less than one month. In honour of the Double Down launch, KFC Canada started a Facebook page for fans of the decadent sandwich to share stories, videos and even eating techniques.

The famed Double Down sandwich from KFC debuted in Canada this fall and was sold for a limited one-month run.

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Tags: Franchise FYI

The Freedoms of Franchising: How much flexibility will you have as a franchisee?

Posted Monday, January 3, 2011 in Franchise Info

By Darrell Jarvis

As a prospective businessperson, you are interested in establishing and operating your own business and being your own boss. By picking up this magazine, you are considering pursuing your interest with a franchise, rather than starting a new business from scratch. You may have found additional confidence from the promise of an established track record, existing systems and designs, and the offer of training, support and advice. However, by buying into a franchise, are you sacrificing the freedom you are looking for?

If franchisors were to create a recipe for the perfect franchisee, the ingredients would include attributes like business acumen, customer service orientation, leadership skills, and, depending on the franchise system, perhaps even a caring attitude or artistic abilities. Fundamentally, however, the recipe would also include one part entrepreneurship to two parts compliance.

Read the full article: The Freedoms of Franchising

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Tags: Darrell Jarvis, Franchise Basics, Getting Started

Ending A Franchise Relationship: If I am Found in Default of my Franchise Agreement, What Happens?

Posted Friday, December 31, 2010 in Franchise Info

Frank Robinson
Lawyer

Q If I am found in default, what happens?

Frank says:
To a large extent, the default and termination procedure will be described in the franchise agreement, which will likely grant the franchisor a great deal of discretion, giving it the choice to note or waive the default, or enforce termination rights.

If the default is curable, the default notice should set out the ways and timeframe in which you can correct it and bring yourself back into compliance. If the default is not cured in the required manner, the franchisor will likely seek to terminate. In other instances, the franchisor may seek to terminate the agreement without notice, and may even sue you for breach of contract.

Even with these contractual rights, most franchisors will have invested time and effort into the franchise relationship and, as such, will usually want to make every effort to preserve it.

Read the full article: Ending a Franchise Relationship

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Tags: Ask the Experts, Franchise Agreement, Frank Robinson

Financing for a Family-friendly Lifestyle: A Fine Balance

Posted Thursday, December 30, 2010 in Professional Services

By Daryl Turko

I’m able to run my business and spend as much time as possible with our kids, which was my goal. Once they started school, I still worked every day, but stopped at 3:30 p.m. It can be challenging to get everything done in six hours, which means some evening work and off-hours meetings for me. For the most part, though, I’m able to work my job around my family.

Over the years, I have volunteered at my kids’ schools, accompanied them on field trips (I was one of the few Dads who were able to do so) and helped them with homework. Things are different now—Danielle, 17, is in high school and Paul, 14, will be starting soon—but my life as a franchisee still fits our lifestyle. Pat and I do not push it. Sure, I could take on more clients, but it would mean I’d have to spend more time on business and less with the kids. We live on less purposely and hope the kids will understand. That said, over the years I’d have great stretches where I’ve earned as much as I would have at any full-time, 9-to-5 job, except I was able to work just 20 to 30 hours a week.

I like being there for the kids, but I also take advantage of warm sunny days. I do a bit of work around the house when things need to be done, like cutting the grass or shovelling snow. I’m working on a basement renovation right now. There’s no commute time, so I save an hour or more a day. That said, I am able to work from home because I am very disciplined and organized; I can juggle a lot of different tasks and wear many hats. I treat my clients very well and am very receptive to their needs; they don’t need cash a week from now; they need it today or tomorrow.

Read the full article: Financing for a Family-friendly Lifestyle

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Tags: Daryl Turko, Finance & Tax, Living the Dream

Building Beauty

Posted Wednesday, December 29, 2010 in Personal Services

By Diane Peters

In France, the name Yves Rocher is as well known as Coke or Pepsi, and has clout in Quebec, too. That history, along with the challenge of raising the brand’s profile across North America, attracted seasoned executive René Desmarais to join Yves Rocher North America as CEO four years ago. “I saw an awful lot of potential,” says Desmarais of the cosmetics company that focuses on botanical-based beauty products.

Desmarais had formerly worked in the food and media industries and was now set on both streamlining and expanding the company. While the brand dates back to 1959 in France, it’s only been in Canada since 1986. The company sells its products through mail order, the Internet and, until recently, only operated corporate stores, the majority of which were in Quebec.

Desmarais spent his first years with the company improving internal systems. For instance, all Yves Rocher customers get a direct mail package every three weeks; Desmarais made sure that system worked more efficiently and the branding visually matched the company’s other marketing efforts.

More recently, he’s focused on launching Atelier of Botanical Beauty stores across Canada, most of which will be franchises. The first outlet opened last June in Edmonton and by the end of the year, Desmarais expects to have 32 open across Canada. (Some stores will be revamped corporate locations, and some of those corporate stores will become franchises.)

The outlets sell Yves Rocher products, including lotions, shampoos, perfumes, makeup and soaps, and offer spa services such as facials. All of the company’s products have been recently repackaged and reformulated to contain more botanical ingredients.

Desmarais has plans for an aggressive expansion of the new concept. The company will have 75 stores (a mix of corporate and franchised) across Canada by the end of the year; he expects that number to reach 120 in five years. While there are currently no locations in the U.S., Desmarais expects to open stores there as well.

Read the full article: Building Beauty

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Tags: Beauty, Diane Peters, Health & Beauty

At what point should I consider going to court over a franchise-related issue?

Posted Tuesday, December 28, 2010 in Franchise Info

James Bond
Lawyer

Q At what point should I consider going to court over a franchise-related issue?

James says:
First, you should know what your franchise agreement says about how disputes are handled. It is possible you may be prevented from going to court over a particular type of dispute you have with your franchisor. The agreement might require certain disputes to be handled by mediation or arbitration, either as a final solution or a necessary step before going to court.

If the franchise agreement doesn’t require mediation or arbitration, you should weigh your options carefully, as court proceedings can be lengthy and expensive. However, if the dispute is significant enough, court action may be appropriate. For example, if your franchisor has incorrectly alleged you have breached the franchise agreement and is terminating the franchise, you should seriously consider going to court, because the risk of not doing so (losing your franchise) is likely going to outweigh the cost of proceeding.

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Tags: Ask the Experts, Franchise Agreement, James Bond

Ending a Franchise Relationship – What Happens if I am Found in Default of my Franchise Agreement?

Posted Tuesday, December 28, 2010 in Franchise Info

Frank Robinson
Lawyer

Q If I am found in default, what happens?

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Tags: Ask the Experts, Franchise Agreement, Frank Robinson

New weapon for lice franchise

Posted Monday, December 27, 2010 in Personal Services

Head lice sufferers now have access to a new technology to combat their condition, available though the Lice Squad Canada franchise.

Treatment using the Lousebuster™ device is being implemented throughout the Lice Squad franchise system and is also available through the company’s training clinic near Barrie, Ont. The equipment, developed using research by University of Utah evolutionary parasitologist Dale Clayton, PhD, and commercialized by Larada Sciences, has been shown to kill 95 per cent of head lice and eggs in a single 30-minute treatment.

Lice Squad Canada provides natural alternatives for lice removal through a network of franchisees across Canada, working to eliminate the stigma associated with the condition and discourage the use of pesticide-based treatments.

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Tags: Franchise FYI, Health & Beauty

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