(a) absolute (i.e. the franchisor and/or the franchisee will do something); or
(b) qualified (i.e. the franchisor and/or the franchisee will try to do something).
It is easy to assess whether a party has complied with an absolute obligation. They either have or they haven’t and if they haven’t the innocent party will have the right to bring a claim for breach of contract (the main remedy for which is an award of damages).
Assessing whether a party has complied with a qualified obligation can be more difficult as it largely depends on the way in which the obligation is worded and the circumstances of the individual contract. Certain legal phrases, known as “endeavours clauses” are used to indicate which end of the spectrum the obligation sits and implies into the contract how far the party on whom the obligation is placed will have to go to show compliance with the obligation. The endeavours clauses most commonly used in franchise agreements are “best endeavours” which is the most onerous of all the endeavours clauses and “reasonable endeavours” which is the least of all the endeavours clauses. So what do these phrases actually mean?
– e.g. the franchisee will use its best endeavours to promote the business.
– is viewed from the perspective of the person who benefits from the obligation.
– to satisfy an obligation to use best endeavours the party on whom the obligation is placed should take all those steps in their power which are capable of producing the desired result and are steps which a prudent, determined and reasonable person, acting in its own interests and desiring to achieve the result would take.
– an obligation to use best endeavours does not require the party on whom the obligation is placed to take actions which would lead to its financial ruin, undermine its commercial standing or goodwill, or have no likelihood of being successful.
– e.g. the franchisor will use its reasonable endeavours to advertise the franchise.
– is viewed from the perspective of the person who has to comply with the obligation.
– to satisfy an obligation to use reasonable endeavours the party on whom the obligation is placed should adopt and pursue a reasonable course of action (taking only one course of action may be reasonable) in order to achieve the result, bearing in mind its own commercial interests and the likelihood of success.
Whilst most franchise agreements are relatively non-negotiable as a franchisee you might seek to negotiate with the franchisor to reduce onerous “best endeavours” obligations to less severe “reasonable endeavours” obligations.
Alternatively, you may wish to ask for clarification from the franchisor as to what steps you would and would not be expected to take to comply with such an obligation. As the franchise agreement will undoubtedly contain an “entire agreement” provision the franchisor’s response should be annexed to the execution copy of the franchise agreement (i.e. the document that is signed by the parties).
This article does not constitute legal advice. This article is based on English law, is not intended to be an exhaustive review of the law, and specific advice should anyway be taken in particular circumstances.
The author, Sarah Beardmore, is a member of Freeths LLP.
Last month, thousands of British students found out their A-level results. Although the news was surely happy and rewarding to some, not every student can say the same: this year’s results show that the proportion of students passing their A-levels dropped for the first time in three decades, shows a report published by The Telegraph.
But does that really matter when it comes to building your own success? Not really. Many successful personalities – even millionaires and billionaires – didn’t even try to pass their A-levels and that didn’t harm their chances. The following infographic shows five great examples of people who became extremely successful without good A-levels results.
Feel free to share our infographic on your blog, website or social media channels!
|<a href=”http://www.selectyourfranchise.com/franchise-blog/wp-content/uploads/2014/09/A-levels-infographic.png”><img alt=”A-levels infographic” src=”http://www.selectyourfranchise.com/franchise-blog/wp-content/uploads/2014/09/A-levels-infographic.png” width=”700″ height=”1500″ /></a>|
Select Your Franchise is once again teaming up with Warner Goodman to launch a new seminar ‘Google and Social Media – It’s All Change’, an initiative included in the Internet Profitability Programme.
As you probably already know, an effective online strategy is currently the key to empower your company, enabling you to create new business and to build on existing client relationships. This programme wants to help Directors and Decision Makers to unlock the secrets to online profit!
After the first seminar (which happened in July), we are organising a new event in September. This free introductory seminar will happen in Southampton, in Warner Goodman’s offices, on two different dates: Wednesday 3rd September and Thursday 4th September.
To book your place send us an email (email@example.com) or call 023 8027 5710 between Monday and Friday, 9am to 5pm.