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Jo C.
Jo C., Barrister
Category: Law
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Experience:  Over 5 years in practice
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I bought a franchise last year, a franchise consultancy where

Customer Question

I bought a franchise last year, a franchise consultancy where I would advise clients on franchises and if they purchased them, I would get a fee. I never made any money from it and I've come to realise the guy who runs it, ie the CEO of the master franchises is a bit of a crook. On the brochure it says that you one have a resellable asset but each time I ask the guy about reselling, he ignores my emails.
Is there anything in UK franchise laws around the reselling of franchises etc?
Submitted: 1 year ago.
Category: Law
Expert:  Alex J. replied 1 year ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
Do you have a buyer for your franchise?
What does the resale clause say? Do you need the franchisor's consent?
Kind regards
AJ
Customer: replied 1 year ago.
No, the. CEO said he'd look for one but I've heard nothing from him. There is no resale clause. The brochure says that it's a resellable business asset but nothing on how this is done.
A lot of the terms in the agreement were not upheld, such as training, help as agreed etc.
Expert:  Alex J. replied 1 year ago.
Hi,
Thank you.
Is the reason why you are selling it because he is in breach of the Franchise Agreement?
Kind regards
AJ
Customer: replied 1 year ago.
The reason I'm selling is because I realise the CEO lied about potential earnings and also the way in which leads would be sourced, ie through his is own Directory. Not more than 5 leads were ever sourced through him and they were all unsuccessful. I also spoke to another franchisee who said the same thing and also eluded that the whole thing was a scam.
Expert:  Alex J. replied 1 year ago.
Hi,
Thank you.
I will draft a response detailing your options. This may take a little while so please do not be concerned if you do not hear from me right away.
In the mean time can you paste a copy of the franchise agreement into this link?
There is no specific Franchise Law however I would note that there is no specific law here other than a potential breach of contract and contractual mis representation.
Kind regards
AJ
Customer: replied 1 year ago.

I have highlighted in bold the terms which were not actually provided and another franchisee complained of this as well. Thanks

mySmartEvents Ltd. Franchise Agreement
Franchise Agreement
Date: 28th of April 2014 Franchise territory: Dubai
This agreement is made between mySmartEvents Ltd. (“the Company”) incorporated and registered in England and Wales with company number 08732566 whose registered office address is***** London W1K 5DS, and the Franchise Agent: Name: ____________________________________________________________________________________ Address: __________________________________________________________________________________ Tel / Mobile: _______________________________Email: ___________________________________________
Schedule
• Exclusive Franchise Territory for My Smart Franchise • Commission on all revenue • Online Training & Support by Skype and email • Technology and Website • Integrated International Directory System
• Email Address at mysmartfranchise.com • 200 Business Cards, Tailored Brochures & Marketing Material - Initial supply. • Logos & artwork supplied for local printing as required. • Use of Head Office as Virtual Office Address
Franchisee Purchase Price • Full Purchase Fee £5500.00 • Deposit: £5500.00 • Balance: Paid in full • Hosting/Support Fee $100.00 per month payable after first three months Preferred Currency: GBP£ / Euro€ / US Dollar$ /ZAR • All rates are quoted exclude Vat/Tax (if applicable in your country).
Deposit Payment Information: Please tick [ ] Credit Card Payments: Visa, Visa Debit, and MasterCard
Cardholder Name: ______________________________________________________________________________
Billing Address: ________________________________________________________________________________
Credit Card Type: Please Tick Visa [ ] Visa Debit [ ] MasterCard [ ] Credit Card No.:
Expiration Date: ____________________________________________
Amount to charge: ________________________
CVN (Last 3 digits of security code on reverse strip) __________ Agreement I agree to the Standard Terms and Conditions as received, and agree to the deposit payment as detailed above. Signed: ________________________________________________ Full Name (Print): _______________________________________ Date: ____/____/____
mySmartEvents Ltd. Franchise Agreement
Declaration
I have received, read and agree to the full terms of business, including: • Hosting Support fees may be adjusted in line with market inflation / up to 10% per annum. • This agreement is subject to acceptance by MySmartEvents Ltd. and is binding once accepted. • Franchisees agree to set up Standing Order for monthly Hosting/Support Fee. • Franchisees agree to a Self Billing invoice arrangement for payment.
THIS AGREEMENT DATE: ___________________________________
PARTIES:
(i) The Company mySmartEvents Ltd. incorporated and registered in England and Wales with company number 08732566 whose registered office address is*****lrm;, London W1K 5DS
(ii) Franchisee (Company/Individual) _____________________________________________ of (address) ________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________ Company Registration Number/VAT /Intra EU: ___________________________________
FRANCHISEE TERRITORY: MySmartFranchise.com/Dubai The standard terms and conditions appended to these Particulars (Terms and Conditions) which have been received, read and understood by the parties form the basis of this agreement and the contractual arrangements between the parties. This agreement has been entered into on the date stated above.
Signed for and on behalf of mySmartEvents Ltd
.......................................................... Director/Representative
Signed by the Franchisee
.......................................................... Director/Individual/Franchisee Franchisee Name: (Please print)
mySmartEvents Ltd. Franchise Agreement
Standard Terms and Conditions
Background (i) The Company as a result of extensive research, work, expense and practical business experience has developed the Business that is carried on through the Website; (ii)The Company has built up a substantial reputation and goodwill in the Trade Name and in the Website that is associated with the highest standards of service. The Company is the exclusive owner of all rights in the Trade Name and the Website; (iii)The Franchisee wishes to acquire from the Company the exclusive right (subject to the rights of the Company contained in clause 2.2) and franchise to operate the Business through the Website in respect of Company’s wish to obtain qualified leads and sales in accordance with the terms of this agreement.
Agreed terms
1. Interpretation 1.1 In this agreement where the context admits the following expressions shall have the meanings set out below: • Advertising: any booking of a marketing campaign through the directory facilities contained on the Website and for which the Client has paid the full balance. • Business: the business of advertising and marketing of Franchises through the Website, including providing advice and guidance to prospective Franchisees in respect of such Franchises with a view to completing an investment with a Franchisor • Commission: the payment to be made by the Company to the Franchisee following each marketing campaign to be calculated as follows: o in respect of all revenues, 60% of the commission as agreed. The Company to retain 40% of the Franchisees commission as calculated above. • Confidential Information: any information which is disclosed to the Franchisee by the Company pursuant to, or in connection with, this agreement (whether orally or in writing and whether or not such information is expressly stated to be confidential) or shall otherwise come into the hands of the Franchisee in relation to the Business, the Services or the Website other than information which is already in the public domain. • Customer: any client who accesses the Website other than the Franchisee, other franchisees and the Company. • Client Payment: the total net sum of the monies paid by the Client to the Company in respect of the marketing campaign • Territory: the area known as the “Franchise Territory’ • Company’s Commission: any net sum of commission actually received by the Company from a Client following in accordance with the relevant Standard Agreement. • Gross Monthly Commission: the total of all Commission payable to the Franchisee in relation to the total of sums received by the Company by way of Company’s Commission in the previous calendar month. • Initial Fee: the sum paid to purchase the Franchise. • Manual: any manual or training documents (in so far as they are available) setting out the operations and procedures for running the Business through the Website compiled by the Company. • Profile Page: the profile page or territory page of the Franchisee on the Website listing any Franchisors advertised by the Franchisee (including those marketed on behalf of Affiliates) and details of the Franchisee. • Support Fee: the sum paid per calendar month in advance, on an ongoing basis to support the website and provide support. This fee is subject to increase inline with inflation (RPI) or to a maximum of 10% per year. • System: the Confidential Information relating to the management and operation of the Business through the Website and the methods of marketing and promoting the Business through the Website. • Trade Marks: the trademarks and service marks operated by the Website • Trade Name: the name mySmartFranchise under which the Business is carried on. • Website: the website contained at domain www.mysmartfranchise.com
mySmartEvents Ltd. Franchise Agreement
1.2 Clause, schedule and paragraph headings shall not affect the interpretation of this agreement. 1.3 A person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality). 1.4 Words in the singular shall include the plural and vice versa. 1.5 A reference to any party shall include that party's personal representatives, successors or permitted assigns. 1.6 A reference to a statute, statutory provision or subordinate legislation is a reference to it as it is in force from time to time, taking account of any amendment or re-enactment and includes any statute, statutory provision or subordinate legislation which it amends or re-enacts. 1.7 Any obligation in this agreement not to do something includes an undertaking not to permit that thing to be done.
2. Rights granted 2.1 In consideration of the Initial Fee and the Support Fee and the payments contained in clause 3 of this agreement, the Company (subject to the provisions of clause 2.2) grants the Franchisee an exclusive licence and rights to: • Operate the Business through the Website and the Profile Page. • Use the Trade Name, Trade Marks, etc in accordance with this agreement. • Use the Company's copyright, material, know-how, knowledge of the Website and the operation of the Business as it is made available to the Franchisee and in accordance with this agreement. However for the avoidance of doubt the Franchisee shall not be entitled to the source code of the Website. • Upload material and information onto the Website in accordance with this agreement and the Package. 2.2 The rights contained in clause 2.1 of this agreement do not affect the rights of the Company (but this right will not be shared or licensed to any franchisee or any other person) In exercising the right contained in clause 2.2 of this agreement, the Company is entitled to stream video and text of any content across any part of the Website including the Profile Page, in agreement with the Company.
3. Initial Fee and Commission 3.1 The Franchisee will pay the Initial Fee to the Company on the date of this agreement. 3.2 In consideration of the Company’s continuing obligations under this agreement; throughout the term of this Agreement the Franchisee will without deduction pay the Company the Support Fee in advance on the 1st business day of each month. 3.3 Within 28 days of receiving any payments under clause 3.2 the Company will provide the Franchisee with a receipted invoice. 3.4 All marketing campaigns must be made by or on behalf of Clients through Head Office in London UK. 3.5 Within 28 days of receiving any payments the Franchisee will provide the Company with a receipted VAT invoice unless a Self Billing invoice agreement is in place.
The term of the agreement will continue unless terminated in accordance with clause 12 of this agreement. The agreement will be automatically renewed every five years, from the date of this agreement, provided the terms of this agreement have been met. The Company reserves the right to re issue an updated agreement at this time.
4. Company's initial obligations 4.1 The Company will within a reasonable period following the date of this agreement provide: (a) Such general advice as the Company sees fit on how to operate the Business through the Website (b) An initial training programme for the operation of the business and Website (c) A user name and password ***** create a Profile Page access the relevant parts of the Website
5. Company's continuing obligations 5.1 Provided that the Franchisee continues to comply with their obligations under this agreement the Company shall: (a) Provide the Franchisee with know-how, advice and guidance relating to the Business and Website.
mySmartEvents Ltd. Franchise Agreement
(b) Keep the Website operational subject to temporary disruption for repair or development of the Website. (c) Ensure the Franchisee has continued access to the Website subject to temporary disruption for repair or development to enable the Franchisee to conduct the Business through the Website. (d) At the Company’s discretion continue to market and advertise the Website to Franchisors (e) Provide such improvements and additions to the Website as the Company (in his absolute discretion) sees fit.
6. Franchisee's obligations 6.1 The Franchisee shall at all times during the term of this agreement: (a) Operate the Business through the Website and in accordance with the Manual. (b) Only use the Website for the Business and in accordance with any rules from time to time imposed by the Company on the use of the Website. (c) Use its best endeavours to promote and extend the Business and the Website. (d) Not to use any Confidential Information other than for the purpose of the Business. (e) Not to upload or facilitate or permit the uploading of offensive, racist, derogatory, defamatory or otherwise illegal material or writings to the Website. (f) Ensure the availability of suitable reporting facilities (whether by e-mail or telephone) for any user of the Website to report material which may be offensive, racist, derogatory, defamatory or otherwise illegal. (g) Ensure that any material uploaded to the Website does not contravene any legislation relating to copyright, design rights, trademarks or trade secrets. (h) Ensure that in operating the Business through the website it does not breach the Data Protection Act 1998 or other legislation relating to the protection of data, as guided by the . (i) Ensure compliance with any privacy policy or statement contained on the Website. (j) Ensure compliance with all applicable statutes in the operation of the Business and the Website. (k) Procure that the Individual complies with all obligations in this clause 9 and that that person is clearly listed on the Website as the main point of contact for the Franchisee. (l) Not to use the Trade Marks, Trade Name, Website or any intellectual property contained on or in that Website other than in the ordinary course of operating the Business. (m) Not to cause or permit any harm or damage to be caused to the Website Trade Marks, Trade Name or goodwill of the Website. (n) Not to advertise anything on the Website other than the Company's without the written consent of the Company. (o) Allow the Company to assess all material posted on the Website and to remove any material which it (at its sole discretion) believes is in breach of this agreement. (p) Ensure all prices and other information relating to the Franchisors are listed correctly and accurately on the Website and Profile Page and are up-to-date.
7. Advertising All advertising of the Business and Website by the Franchisee is to be approved in writing by the Company.
8. Insurance The Franchisee shall take out, or be responsible for any insurance cover which may be required in the normal course of business within that territory, with a reputable insurance company. This may include Public liability insurance, which may be standard protection for that Franchisee. The Company does not specifically require such insurance however shall be indemnified against any such claim or occurrence, which may require or benefit from having adequate insurance cover. See clause 13. Indemnity.
mySmartEvents Ltd. Franchise Agreement
9. Sale of business The Franchisee may transfer or sell the whole rights contained in clause 2 of this agreement with the Company's consent. The Company shall consent to a transfer provided that: (a) The Franchisee has complied with all the terms and conditions of the agreement, (b) There are no subsisting breaches of the agreement, (c) The purchaser meets the Company's minimum standards with respect to prior business experience and financial standing and satisfies any current recruitment criteria, (d) Payment of the Company's costs of investigation and training is made by the Franchisee, whether or not the sale goes ahead, (e) All moneys due to the Company have been paid, including (without limitation) including any Commission which is payable up to and including the transfer date, (f) The proposed purchaser undertakes initial training, (g) A suitable individual is to take the place and the burden of the obligations of the Individual, and (h) The Franchisee pays the Company an administration fee equal to the sum of 10% of the price of the sale to a new and agreed buyer. (i) The Franchisee cannot sell part there of or sell or assign a separate Agent without the express written permission of the Company.
10. Termination 10.1 Without prejudice to any rights that have accrued under this agreement or any of its rights or remedies, the Company may terminate this agreement without liability to the Franchisee: (a) immediately (or following such notice period as it sees fit and without any recourse to the Franchisee), by giving written notice to the Franchisee if the Franchisee: (i) commits a breach of any material term of this agreement and (if such breach is remediable) fails to remedy that breach within a period of 14 days after being notified in writing to do so; or (ii) repeatedly breaches any of the terms of this agreement in such a manner as to reasonably justify the opinion that its conduct is inconsistent with it having the intention or ability to give effect to the terms of this agreement; or (iii) suspends, or threatens to suspend, payment of its debts or is unable to pay its debts as they fall due or admits inability to pay its debts or (being a company) is deemed unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986 OR (being a natural person) is deemed either unable to pay its debts or as having no reasonable prospect of so doing, in either case, within the meaning of section 268 of the Insolvency Act 1986 or (being a partnership) has any partner to whom any of the foregoing apply; or (iv) has a petition filed, a notice given, a resolution passed, or an order made, for or in connection with the winding up of the Franchisee; or (v) has an application made to court, or an order made, for the appointment of an administrator or has a notice of intention to appoint an administrator is given or has an administrator appointed over the Franchisee; or (vi) has a floating charge holder over the assets of the Franchisee become entitled to appoint or appoint a receiver over the assets of the Franchisee; or (vii) has a person become entitled to appoint a receiver over the assets of the Franchisee or has a receiver appointed over the assets of the Franchisee; or (viii) has a creditor or encumbrancer of the Franchisee attach or take possession of, or has a distress, execution, sequestration or other such process levied or enforced on or sued against, the whole or any part of the Franchisee's assets and such attachment or process is not discharged within 14 days; or (ix) undergoes a change of control. 10.2 The Company may terminate the agreement if the Individual:
mySmartEvents Ltd. Franchise Agreement
(a) Is convicted of a criminal offence. (b) Is the subject of a bankruptcy petition or order. 10.3 Without prejudice to any rights that have accrued under this agreement or any of its rights or remedies, the Franchisee may terminate this agreement without liability to the Company on giving the Company not less than 6 months' written notice
11. Conditions following termination 11.1 On termination the Franchisee and the Individual shall: (a) Cease to operate the Business through the Website (b) Remove the Profile Page from the Website (c) Cease to use the Trade Name and Trade Marks (d) Not make or receive telephone calls or write or respond to e-mails in connection with the Website unless in accordance with this clause (e) Pass enquiries and details of potential customers or potential Franchisors/Franchisees received as a result of the Website to the Company. (f) Not divulge or use any Confidential Information. (g) Pay all debts owing to the Company immediately which are payable up to and including the termination date 11.2 Following the termination date, the Franchisee and the Individual will: (a) continue to provide guidance and support to Customers in respect of existing marketing campaigns and any cancellations of those campaigns, and (b) cease marketing any Company’s contained on the Website that were initially uploaded to the Website by the Company.
12. Representations This agreement contains all the terms which the parties have agreed in relation to the licence granted by this agreement and the Franchisee and the Individual acknowledges that he has not entered into this agreement in reliance on any representation or statement made by the Company not expressly set out in this agreement.
13. Indemnity The Franchisee and Individual jointly and severally shall indemnify the Company against any direct loss (for the avoidance of doubt the following would be deemed to be a direct loss, booking and confirmation errors made by the Franchisee or its representatives resulting in charges to guests or compensation requirements, errors and or assumptions made or promised to hotels with respect to advertising or video production resulting in lost revenue or compensation), reasonable costs or expenses incurred by the Company arising from any breach of this agreement or any act, neglect or default of the Franchisee, its agents and employees.
14. No partnership or agency Unless specifically contained in this agreement it is not intended to, or shall be deemed to, establish any partnership or joint venture between any of the parties, constituting the Franchisee, the agent of the Company, nor authorise the Franchisee to make or enter into any commitments for and on behalf of the Company.
15. Waiver No failure or delay by a party to exercise any right or remedy provided under this agreement or by law shall constitute a waiver of that or any other right or remedy, nor shall it preclude or restrict the further exercise of that or any other right or remedy. No single or partial exercise of such right or remedy shall preclude or restrict the further exercise of that or any other right or remedy.
mySmartEvents Ltd. Franchise Agreement
16. Continuing provisions The termination of this agreement (for whatever reason) shall not terminate any provision which is expressly or by implication provided to come into or continue in force after such termination and shall be without prejudice to the accrued rights and liabilities and other remedies of the parties to this agreement.
17. Severance 17.1 If any provision of this agreement (or part of any provision) is found by any court or other authority of competent jurisdiction to be invalid, illegal or unenforceable, that provision or part-provision shall, to the extent required, be deemed not to form part of this agreement, and the validity and enforceability of the other provisions of this agreement shall not be affected. 17.2 If a provision of this agreement (or part of any provision) is found illegal, invalid or unenforceable, the provision shall apply with the minimum modification necessary to make it legal, valid and enforceable
18. Variation No variation of this agreement shall be effective unless it is in writing and signed by the parties (or their authorised representatives).
19. Interest If the Franchisee or Individual fails to make any payment due to the Company under this agreement by the due date for payment (due date), and these debts are older than 30 days, then, without limiting the Company's remedies, the Franchisee and/or Individual shall pay interest on the overdue amount at the rate of 1% per annum above Barclays base lending rate from time to time. Such interest shall accrue on a daily basis from the due date until the date of actual payment of the overdue amount, whether before or after judgment. The Franchisee and the Individual shall pay the interest together with the overdue amount. The Franchisee and Individual shall pay all the Company's costs, charges and expenses directly or indirectly incurred in obtaining or otherwise enforcing payment of the same. This clause shall not apply to payments that the Franchisee contests in good faith.
20. Notice 20.1 Any notice required to be given under this agreement, shall be in writing and shall be delivered personally, or sent by pre-paid first class post or recorded delivery or by commercial courier, to each party required to receive the notice or other communication at its address as set out below: (a) Company: the address contained at page 1 of this agreement (b) Franchisee: the address contained at page 1 of this agreement (c) Individual: the address contained at page 1 of this agreement or as otherwise specified by the relevant party by notice in writing to each other party. 20.2 Any notice or other communication shall be deemed to have been duly received: (a) if delivered personally, when left at the address and for the contact referred to in this clause; or (b) if sent by pre-paid first class post or recorded delivery, at 9.00 am on the second Business Day after posting; or (c) if delivered by commercial courier, on the date and at the time that the courier's delivery receipt is signed.
21. Governing Law and Jurisdiction This agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales

Expert:  Alex J. replied 1 year ago.
Thank you.
It will take me a little while to read through this. I will revert to you as soon as possible.
Kind regards
AJ
Customer: replied 1 year ago.

Okay, thanks.

Expert:  Alex J. replied 1 year ago.
Thank you.
Kind regards
AJ

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