Yes that is correct if you will make the franchisee owner as the head of the center, usually franchise based business runs on this concept only. And you can fix his liabilities and duties in an agreement.
Regards
Management Contract/Partner
Hello, We are a newly formed pvt ltd entity into Education business where we impart training programs thru our network of centres. We want to participate in various government funded program but they do not allow franchisee centres under the program, we do not have necessary funds to setup a fresh infra for such programs. Someone suggested that we can have a management contract with the franchisee partner and appoint him as a Head of the centre. This Head will be responsible for arranging the necessary infra and will get a portion of revenue against the delivery. Is this correct? Can we register that franchisee centre as our own centre and make him responsible for arranging infra and managing complete operations and report to us. Your views are highly appreciated. Thanks Vivek
Asked 8 years ago in Business Law
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6 Answers
-Yes, you could enter into a Memorandum of Understanding or a Management Contract, which ever way you'd like to call it to give effect to the arrangement you have thought of.
-You can fix the liability of this 'Head of Centre' to arrange the infrastructure etc. in lieu of the revenue sharing model under which you propose to work with him.
1. The franchisee is nothng but the agent of the main organisation.
2.So since you are the principal company you can incorporate any terms in the agreement.
3. The main part of franchisee agreement is sharing of profit and management.
4.generally the franchisee uses the brand name giving its own men and infrastructure and share the profit.
Will this management contract partner be legally correct when the department is not allowing franchisee operations. will we be required to have the lease of the premisis in our name or the management partner can manage that
Asked 8 years ago
Management partner can manage that sir, not necessary that the lease is on your name.
Regards
Any agreement which may violate the existing rules in this regard would not be of any benefit to you.
Hence while drafting an agreement with the franchisee, care should be taken to avoid such legal jargon which may be an obstacle or objection in the eyes of authorities granting permission.
A management contract with the franchisee partner and appointing him as a Head of the centre is an arrangement within and this may not cover the franchisee rules or it may not be applicable.
A Franchise Agreement is a legal, binding contract between a franchiser and franchisee.
This is the center of every franchise arrangement. A franchise agreements grants franchisees the right, for a fee, to operate a single franchised business, in accordance to the terms as set forth in the agreement.
It is a continuing relationship in which a franchiser provides a licensed privilege to the franchisee to do business and offers assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration.
You can draft an agreement to the effect that it may not affect the smooth sailing of the educational business.
The proposed management contract may not contain the set of agreements that are applicable to franchisee agreement.
Will this management contract partner be legally correct when the department is not allowing franchisee operations. will we be required to have the lease of the premisis in our name or the management partner can manage that.
Since the management partner shall be considered as a partner in your business, the lease of the premises should be in the name of the business establishment.