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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3772
Experience:  Solicitors 2 years plus PQE
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Hello Aj, I had previously contacted you with regards to

Customer Question

Hello Aj,

I had previously contacted you with regards XXXXX XXXXX independent agents/ disturbers to sell Caribbean products / adopt the business opportunity under the the phrasing distributor for/ of The Barbados Shop, without franchising.

I was wondering a couple of things

1. If instead of charging a one time fee there is an ongoing percentage that is taken when the independent distributors order products wholesale that goes to The Barbados shop management company with the remaining king to purchase product if that would qualify as franchising , although the distributor would be using their own business name.


The second question:
What if the business no longer has a registered company in the UK, but still has it's registered company ( online shop ) which is in the Caribbean and the business wishes to have a UK website of its online shop , in it's brand name but with the extension.co.uk , but does not wish to franchise the opportunity ( as it is a start up business in existing for a year and a half , so won't have much history) , if the business owns the domain , is it legally possible for the business to recruit an independent distributor in the UK to operate the shopping site under the Company name, whereby the independent distributor would order products from the company, and collect the monies from the sale. Or would this be considered franchising ( illegally).
Submitted: 3 years ago.
Category: Law
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you for your question and welcome back.

In response to your questions:

1. I still do not think this would necessarily qualify as a franchising agreement. If they pay you a percentage of the sales they make then you just need to be sure you can monitor this and the stock they take from is stored separately so you can take security over it for non payment.

2. Using the domain name under a license would still not a be a franchise. The parties do have to actually intend to enter into a Fr
franchise arrangement.

I look forward to hearing from you.

Kind regards

AJ
Alex J. and 2 other Law Specialists are ready to help you
Customer: replied 3 years ago.

Thank you AJ,


 


Just to further clarify,


 


With regards XXXXX XXXXX second question, if the Independent Distributor pays a yearly fee for the use / lease of the domain name in addition to the purchase of products from the company, of which an ongoing percentage ( for branding) is built in ( hidden cost) to the wholesale purchase price of the products they purchase for sale on the .co.uk


 


Would that anyhow constitute a franchise

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

What you are suggesting is licensing them the use of your business assets.

I guess in part that is a franchise, but you are not retaining any control of how they trade or use those assets, which really just makes them distributors objectively speaking.

If the parties intended it to be a franchise and you had control over their trading style and activity then that may be more likely to fall into the franchise category.

What is the significance to you if it was deemed a franchise?

Kind regards

AJ
Customer: replied 3 years ago.

If it is deemed a franchise, wouldn't there be certain fillings that would need to be made under a country law ( in this case the UK) to be registered as a Franchise and certain criteria , such a length of time in business and finances that would need to be disclosed before being able to operate a franchise? And operating as a franchise outside of this would be breaking the law ???


 


 


 


 

Expert:  Alex J. replied 3 years ago.
Hi

Thank you.

Private franchises of this type are not regulated by the government in the UK.

There is some self regulation but in the UK it is governed under the rules of contract as any other business relationship.

Kind regards

AJ
Customer: replied 3 years ago.

Thanks.


 

Expert:  Alex J. replied 3 years ago.
No problem I wish you the best of luck.

Kind regards

Aj
Customer: replied 3 years ago.

Hello AJ,


 


Thank you for following up . I do have another question though it refers a Caribbean based company, sending stock to and having a fulfilment house in the UK dispatch items to customers in the UK which would be marketed and sold by independent sales agents.


 


The fulfilment house mentioned that I would need to provide a VAT number and import in the name of the Caribbean company, how would I go about paying UK sales tax as a Caribbean company without establishing a company in the UK.


 


The previous UK company was dissolved so as to exit and recruit independent sales reps


I visited the HRMC website but haven't found this information for non eu businesses.


 


Do you by chance know the UK law in so far as overseas companies hipping from fulfilment houses in the UK

Expert:  Alex J. replied 3 years ago.
Hi

Thank you.

When your independent sales agents sell the goods, how do they account to you for the money?

Do you invoice them or do they invoice your customers directly?

Kind regards

AJ
Customer: replied 3 years ago.

Hi AJ,


 


 


When the independent agents sell the goods in the instance of:


 


online sales- sales agents would be selling from a .com ( they can use other channels such as ebay /amazon on their own but would need to submit/place the order through the .com (international site) , before the items are dispatched to their customer, therefore they would receive an invoice and would need to make payment to the.com. The other scenario in this instance is the sales agents are given an affiliate link which they would promote to customers and customers would click and shop on the .com on their own and be invoiced directly, with the agent just collecting a comission.


 


 


The other scenario would be the sales agent selling to a physical location making the order online and the customer being invoiced by the sales agent but with the Caribbean company sales details.


 


Thanks you in advance


 


Regards


Miasha


 


 


 

Expert:  Alex J. replied 3 years ago.
Hi

Thank you for your question.

I am just reviewing this now.

Kind regards

AJ
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

You can still pay tax as a foreign company in the UK if you are making supplies in the UK and the point of sale is here as well.

Furthermore you can also register as a foreign with an establishment in England using one of your sales agents or an accountant as a forwarding address.

If you actually need to register for VAT or not, you will have to check with an accountant in England.

Kind regards

AJ
Customer: replied 3 years ago.

Thank you AJ,


 


I think i just got confused.


 


If the supplies aren't made in the UK but are made in Barbados and exported to the UK for point of sale in the UK.


 


Also with regards to exporting the product to the UK to fill the order generated by the sales agent then what happens tax wise here, would the company incur tax in the UK and in the Caribbean as well?


 


Thank you in advance