Whether you are looking to expand your existing business or start a new venture an agency, franchising or distribution relationship can often be an attractive option.

The key features of these three different business models are as follows:

Agency

A principal appoints an agent to negotiate and conclude sales on their behalf. Given the ability of the agent to commit the principal to legally binding agreements, the principal is likely to want some control over the agent's activities and this is usually achieved by the terms of an agency agreement.   

Depending on the nature of the agency the Commercial Agents (Council Directive) Regulations 1993 may apply which will impose important obligations into the agency relationship including the possibility of a termination payment to the agent at the end of the agency.

Franchise

This model concerns the owner of a business who has developed a good reputation and an efficient system. Once this has been done, the owner can allow (i.e. franchise) others to use and operate the business' name and system.   

This typically works well with relatively simple businesses which can be easily replicated, for example fast food outlets, coffee shops or printing and copying outlets. In order to protect the business' good name and confidential material the owner will want very strict controls on what the operator of the franchise can and cannot do.

Distribution

In this case one person a manufacturer agrees to allow a distributor to sell its products. A distributor is similar to an agent except that the distributor is selling on his own behalf and does not have the ability to enter into binding contracts on behalf of the manufacturer.  

To protect the manufacturer's reputation, it is often the case that a detailed agreement is entered into requiring the distributor to maintain certain levels of service, stock and standards.

Protect your interests

In respect of agency, franchising and distribution there is always an element of one person having a close connection with the business of another person. In order to properly protect the interests of both parties it is usual for detailed contracts to be required in order to clearly spell out the rights and duties of each side.

How we can help

If you consider that agency, franchising or distribution may be right for you, we can help guide you through the opportunities which are available under these different business models. Alternatively, if you are thinking of starting a new business, an agency, franchise or distributorship could be an excellent opportunity and we can assist you in understanding the likely legal benefits and disadvantages.

Contact us now

For further information or to arrange an appointment contact a member of the commercial team on 0115 9 100 200 or email commercial@actons.co.uk or fill in the contact form below.