Where Does Your Father Come From?

Sorry:  That isn’t meant to be a personal question (well actually – it is….).   But it’s a relevant question because of things that I came across recently.

Did you know that your father’s place of birth (and so his domicile) may determine where your domicile is.  That isn’t the most exciting of news unless you know that a non-UK domicile may be relevant for certain tax purposes.  I think I might have your attention now….

The key benefit of being a non-UK domicile tax payer is that it may allow you to not have to pay  income or capital gains tax on investments kept overseas – as long as you do not bring the income or the gains into the UK.  You may also be able to ignore inheritance tax on property held overseas.  As with everything to do with tax matters, this is a complex area and you should take advice before doing anything – but there may just be opportunities here.

John Clarke is an exert lawyer assisting SMEs dealing with growth, acquisition, sales, franchising, and in difficulties throughout Fife, Edinburgh and Scotland.

 

franchising

Franchising: the franchisee’s guide

Removing the mysteries

Franchising is a great way to carry on business – and there are many more businesses “out there” that are franchises than are generally known to be. So, what’s it all about?

At its simplest, franchising is a way of you getting into business quickly, by using the ideas, etc of another business. Let’s say that a company sells goods (widgets) in Towns A and B. They want to open in Towns C, D & E, and can either do that themselves or create franchises so that someone else can open there.

As a franchisee, you get:

  • Exclusivity for a defined geographical area (by map or post code) – and that’s why franchising is harder to get right for virtual (rather than physical) sales.
  • A contract (or the like) setting out your rights and theirs – such as:
    • Purchases of widgets only through the franchisor
    • Other things you have to pay: lease costs, marketing or whatever
    • What the franchisor has to do – doing the marketing for example
    • How long things last for
    • What happens if things go wrong, and
    • Most importantly, what you pay to get the franchise.
  •  And all the paperwork will be standard form because the franchisor won’t want to have to remember doing differing deals for different people. It follows that negotiating of “special” rights is usually somewhere between difficult and impossible. That’s one of the reasons why we tend not to suggest that prospective franchisees waste scarce cash on arguments that they are not going to win – but instead make sure that they are fully informed before they “sign up”.

But, bear in mind that the franchise fee (or whatever) is payable throughout the life of the franchise. So, there is no point grumbling about paying it 10 years after you start because by then you know it all. Your options are:

  • Sign up and pay, and by doing so get into business quickly, or
  • Don’t sign up and don’t pay, but get into business slowly.

In some ways, the franchise fee can be looked at as the alternative to doing your own marketing and watching sales build up over time.

We’ve done a lot of franchising work in the last 20+ years, so have a good feel for what works – and what doesn’t. So, if you are interested in having a chat about this whole area, get in touch.

 

franchising

Franchising: the franchisor’s guide

Removing the mysteries

Franchising is a great way to carry on business – and there are many more businesses “out there” that are franchises than are generally known to be. So, what’s it all about?

At its simplest, franchising is a way of expanding what you do by using others’ capital. Let’s say that you buy in goods (widgets), add some value to them (super widgets) and sell them to customers. Things are going well in Town A and B, but you don’t have the cash to open in Towns C, D & E. Bank funding may either not be available or at an unattractive price, and you aren’t ready yet to bring other shareholders on board. Franchising may be an option.

You do a deal with someone to have the rights for Town C (and D & E). They get:

  • Exclusivity for a defined geographical area (by map or post code) – and that’s why franchising is harder to get right for virtual (rather than physical) sales.
  •  A contract (or the like) setting out your rights and theirs – such as:
    • Purchases of super widgets only through you
    • Other things they have to pay: lease costs, marketing or whatever
    • What you have to do – doing the marketing for example
    • How long things last for
    • What happens if things go wrong, and
    • Most importantly, what they pay to get the franchise.
  •  And all the paperwork will be standard form because you don’t want to have to remember opt-outs in various places.

So, you get more sales of super widgets without using your capital, they get into business quickly and everyone is happy. Well, inevitably no – but the difficulties are probably no different in practice to those where you have to manage a dispersed “empire” on your own.

One key thing, though, is that once you start having franchises, you will really start a second business: the first is the existing one, dealing with Towns A & B; but the second one is managing the franchisees, and not selling the super widgets themselves. That change of mindset is important.

We’ve done a lot of franchising work in the last 20+ years, so have a good feel for what works – and what doesn’t. So, if you are interested in having a chat about this whole area, get in touch.