Acting for the shareholder of two iconic music venues

Big Issue Invest has made a significant investment in VU X Earth Limited, the new holding company set up to acquire the group.

Music and arts ventures have been heavily affected by the pandemic so the new funding will allow for additional refurbishment and a training workspace for young people entering the music industry. Over the next five years VU will be collaborating with Hackney Empire, Hackney Music Service and Progression Session, a music charity that provides a platform for young artists and trains young creatives for careers in the industry.

The investment means they can get right back to hosting some of the greatest musicians from around the globe, supporting and inspiring new talent.

You can read more about the investment in Access All Areas, by clicking here.

The Sherrards Corporate team advises Screwfast Foundations Ltd on sale to Van Elle Plc

Screwfast Foundations Ltd are leaders in the design, supply and installation of helical piles and UK & International steel foundation solutions. They are well-known in the construction industry, having worked on prestigious construction projects such as the London 2012 Olympics and the government’s smart motorways programme.

The team worked to a tight timeframe to ensure that the sale took place in line with the requirements of the PLC buyer. The deal was structured with complex provisions regarding the existing plant and machinery of Screwfast.

This matter have been written about in the Construction Enquirer.

Why the franchise agreement is so important

Franchise agreements are often compared to prenups, they are only reviewed when you want to get divorced! However, the franchise agreement is possibly the most important document in the franchise system. If the relationship between franchisor and franchisee breaks down or a franchisee is not compliant, the agreement plays an important part to make sure both parties are protected. It should set out what is expected of both parties from the outset and, most importantly, define their future relationship and set out the terms that will bind them for the duration of the franchise contract.

What should your franchise agreement include?

While there are no set rules on what should be included, the franchise agreement defines the legal relationship between franchisor and franchisee, and it should look to achieve three essential objectives:

1) The “grant” and general terms – It should clearly set out what is being “granted” and licenced from the franchisor to the franchisee, as well as the operating terms that apply to the grant;

2) The brand/ Intellectual Property (IP) – It should protect both franchisor and franchisee, the franchisor’s brand, IP and know-how; and

3) The rules- It should cover the rules the parties are expected to follow in the operation of the franchised business.

The “Grant” and terms

There is no special law for franchising, and if difficulties should arise the franchise agreement will determine what rights and obligations have been set out.

Below sets out what is expected from the “grant” and are also some essential operating terms that should be covered:

  • The rights granted to and the obligations of franchisee – the licence to operate the franchised business;
  • The rights either retained or granted to and the obligations of the franchisor;
  • The goods/services to be provided to the franchisee (if any);
  • Payment terms by the franchisee;
  • The overall duration of the agreement;
  • The franchisee’s use of the franchisors brand identity including trade name, trademark, signs, logos etc.;
  • The procedure to renew the agreement;
  • The conditions of terminating the agreement and what is to happen when the franchising relationship ends;
  • The terms for if and when the franchisee can sell the operating franchise business and the franchisor’s pre-emption rights;
  • The franchisor’s right to change the operating manual (the “rules” – referred to below) and franchise system.

The brand/ IP

The franchise agreement must have provisions in place to protect the franchisor’s brand (including trade name, logo etc.) know-how, system, the manual and confidential information. The Intellectual property rights set out how the franchisee can use trade names, trademarks, and copyrights.

It is in the best interest of both the franchisor and franchisee to ensure that no third party or ex-franchisee infringes these intellectual property rights and does not allow for any external use of trademarks, trade names or copyrighted materials.

The Rules

All franchisees should ideally be treated as a family so there should be no room for favourites. All prospective franchisees should be offered the same terms with no special deals.

A franchisee is, therefore, invariably invited by the franchisor to “take it or leave it”. If a franchise agreement is not negotiable then it is crucial, from the franchisee’s point of view, that it is not only sound from a legal point of view but also workable in terms of the rights and obligations.

The vast majority of the rules will ordinarily be captured under the operating manual – something that you will not have access to until you have entered into the franchise agreement due to it being so confidential – it is, therefore, critical that access is granted to existing franchisees so that any prospective franchisee has the ability to assess how the franchisor operates, how the rules are applied and to understand how the “family” works.

When it comes to entering into a franchise agreement, there are many legal considerations to be aware of, not just covering the above. The franchise agreement is a crucial document in the relationship, and you should completely be understood before signing it.

The Supreme Court rules on the need for variations to be agreed in writing

In a decision last week (16 May 2018), the Supreme Court held that a variation clause (also known as a no oral modification (NOM) clause) is legally effective, restoring the order of the County Court which had been overruled by the Court of Appeal.

Variation or NOM clauses are commonplace in contracts for various reasons and restrict variations of an agreement to those agreed in writing. There are no formal requirements for the validity of a contract at common law, and, by association, no formal requirements for varying a contract. This flexibility can give rise to uncertainty so, principally, NOM clauses add certainty to the mechanism by which contractual variations can be agreed. As well as adding certainty, NOM clauses also operate, in theory, to avert misunderstandings and disputes as to what was orally agreed, as well as the prospect of informal variations undermining written agreements.

In the case in question, Rock v MWB, MWB, as operator of offices in London, granted Rock a contractual licence to occupy office space for a term of 12 months. The licence contained a NOM clause stating: “All variations to this Licence must be agreed, set out in writing and signed on behalf of both parties before they take effect.” Rock had accumulated arrears of a few months’ worth of licence fees and proposed a revised payment schedule, deferring certain payments.

A dispute arose as to whether MWB had accepted Rock’s proposal orally, thereby effectively varying the payment terms under the licence. MWB considered the schedule simply as a proposal and locked Rock out of the premises for failure to pay the arrears. They then terminated the licence and sued for the arrears. Rock counterclaimed for damages for wrongful exclusion from the premises.

In the county court, the judge found that Rock and MWB had agreed orally to adopt the revised schedule, but as it was not in writing, it did not satisfy the variation requirements of the NOM clause. The judge ruled that MWB could claim the arrears.

Rock appealed to the Court of Appeal successfully. It was held that the oral variation had also amounted to an agreement to dispense with the NOM clause, meaning that MWB was bound by the oral variation.

MWB appealed to the Supreme Court where the appeal was unanimously allowed; the NOM clause precluded the agreed oral variation.

NOM clauses therefore operate to provide certainty to contracting parties. Where oral variations are arguably unclear and the interpretation of what was agreed by the individuals involved can be misunderstood, NOM clauses ensure that, by recording any variation, the parties can know exactly what the variation was intended to be. They stop the hinging of an intended variation, in the event of any future dispute, on the recollection of individuals, where mistakes can certainly be made.

Whilst the judgment could be perceived as limiting the freedom of contract, a NOM clause does not invalidate oral variations, it simply forbids them in accordance with the parties’ own intentions at the outset  of their contractual relationship.

The judgment also spells good news for the courts insofar as avoiding unnecessarily escalating litigation costs by parties alleging oral variations, where a NOM clause exists, as a defence. Likewise grounds for summary judgments will rise in such circumstances, bringing down the length and costs of litigation.

Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24 (Rock and MWB respectively) – appeal from [2016] EWCA Civ 553

 

Started a new business in Lockdown? Do you need to consider your Intellectual Property?

For all of us, 2020 has been a unique year with many putting their lives ‘on hold’ throughout the UK’s first lockdown. During this period of self-reflection, it’s no surprise that many decided to turn their lockdown hobby, or their long-considered ideas, into a new business, as they finally had the time to make it a reality, but have you considered your Intellectual Property?

Starting a new business brings a lot of excitement but because it can be done quite quickly, it can sometimes mean that legal formalities, like protecting your Intellectual Property (IP) can be overlooked, which can leave you and your newly formed business at risk

We have put together a few tips to consider for people who have recently set up a new business in lockdown.

What is Intellectual Property?

Intellectual Property (IP) is an umbrella term used to describe a variety of legal rights that attach to certain types of ideas or information.

In order to protect what your business creates, increase your competitive position, and avoid infringing the IP rights of other businesses, there are a few things you should consider:

  • Register your trade name– Ensure that you have protected your brand by registering your trading name as a trademark.  This can be anything from your brand name, logo, product names, or packaging. By registering it you can distinguish and protect your products or services.
  • Domain name registration– Register your domain name and the domain name relating to all potential web addresses you would like to be associated with your business to stay one step ahead of cyber squatters. For example .com, .net, .org etc.
  • IP ownership– Ensure that your company is the owner of IP used by your business and that your company is the registered proprietor of any of its registered IP.
  • Contract dealing with IP- Ensure that any contract dealing with your IP whether with customers, suppliers, contractors or employees, is carefully reviewed prior to signing.

Sometimes it may be necessary for you to prevent other businesses from trying to emulate your business, copy your trademarks, or pass themselves off as your business. Click here for further information.