Franchises In Spain – How To Expand A Successful Business

Born in North American, the business practice of franchises have
experienced spectacular development in the last few decades. The franchise
concept is proving itself as one of the techniques preferred by businesses to
expand their business wings and is particularly appealing to smaller business
enterprises.

The franchise is a method of business cooperation between
independent companies in that one of them named the franchisor, an owner of a
determined brand, patent, method of production or industrial activity which has
triumphed in the consumer world, grants to another company, the franchisee, the
right to carry out its business for a period of time in a defined area under
certain conditions and under an element of control from the franchisor in
exchange for a financial agreement whereby the franchisor is usually paid an
initial upfront payment complemented by successive payments according to sales completed.

Taking into consideration the above and the concept of the
franchise, before these can be sold the franchisor, would have to overcome the
following: introduced a successful business concept during a reasonable period
of time prior to the launch of a chain, be the owner of various rights,
trademarks and signs that his clients recognise him from as compared to his
competitors and provide to the franchisees continued commercial and technical
assistance and an introduction to the businesses model that has worked so well
for him. All of this would be provided during the term of the franchisees
contract.

When entering into contracts the franchisor should protect
his business interests by inserting clauses of non-competition and of
confidentiality in order to prevent the dissipation of invaluable commercial
knowledge and information known as “know-how” during and after the contract.

The advantages that the franchise system offers the
franchisor are the ability to expand rapidly without substantial capital
investment or the need to employ employees, less commercial and financial risks
and more opportunity to concentrate on sales.

The entrepreneur who wishes to take on a franchise project
will need to patent their brand as well as all of its distinctive commercial
signs such as trademarks, logos and name, produce an operating manual and
ensure the contractual documentation is in order. Then the registration of the
franchise can be completed at the Special Registry of Franchisors.

For more information on this subject, or to make an appointment for a
private consultation, please contact us at De Cotta Law, De Cotta McKenna & Santafé on:

Tel.: +34 952 931 781
Fax: +34 952 933 547