You might be seeking to go into a business in Nigeria with a good product or service offering, but you are unable to do this either because:

– You lack the specific licence needed to engage in that particular line of business (very common in the Tech sector).

– You lack the marketing budget to create the right amount of brand awareness for your business.

– You are up against already well established brands in your planned line of business.

– You’re a Non-Nigerian based abroad and you cannot relocate to Nigeria or go through the process of registering and running a foreign company in Nigeria as you intend to set up your business in other countries as well.

– You lack the resources (financial and otherwise)needed to set up your business.

This is where you will be needing what is known as a franchise, which is best suited for start-ups and entrepreneurs seeking relatively immediate market share acquisition in the form of an ready-made pool of customers.

This is what this write-up will be looking at and treating, with its main subtopic focus areas being :

– What a franchise is.

– The legal framework governing franchising in Nigeria.

– The types of franchises and franchising models in Nigeria.

– The necessary components of a franchising agreement .

What is a Franchise?

This is legal mechanism for business expansion involving a party known as a franchisor (usually a well-established company with a registered Trademark, Business license, and Business system), granting another party known as a franchisee the right to use its trademarks and business name in exchange for usually an initial fee, royalties, or/and a share of the franchisee’s profits.

Think of it this way. You are a Techpreneur with a Saas (Software as a Service) that can rapidly process payments while automatically sending SMS transaction notifications to a foreign-based vendor and the buyer based in Nigeria at the same time, and you’re confident it will be a commercial success, but you lack the Business prestige and funds to secure a Payment Processing Service Provider licence from the Central Bank of Nigeria.

You can simply enter into a franchising agreement with a licensed Electronic Payment Processing Service Provider like Paystack to operate as a different brand offering while legally fronting as a subsidiary or service brand variant of Paystack in exchange for royalty payments or a back-end profit sharing arrangement.

Franchising arrangements are possible in almost every commercial sector and are a good market entry tool for start-ups and Nigerian subsidiaries of well-known International brands.

What is the legal framework governing franchises in Nigeria?

Currently, the general laws governing Intellectual Property (especially on technology transfer)in Nigeria also apply franchises as well as Franchising agreements in line with the laws of contract in Nigeria as there’s no specific law on franchising.

What are the types of franchises & franchising models in Nigeria?

The following franchises can be found in Nigeria :

– Job franchises :- Usually involving sole proprietor-business models that consist of low-level investments via the purchasing of basic equipment, product stock and mobile product support such as a bicycle e.g. Fan Yogo Bicycle men and 1-man Sports-betting centres.

– Product/Distribution franchises :- Which involve using the franchisor’s Trademark without any further Business supporting structure e.g Tire Wholesale centers and Computer retailing centers.

– Business format franchises:- This is a franchise system that relies on the use of the franchisor’s trademarks and his business system to market the product e.g. Fast-food franchises and membership fitness centers.

– Investment franchises :-Franchises under this category usually involve large investments by the franchisee and might require the franchisor’s management for the purpose of ensuring returns on investment e.g. 4-5 star hotel franchises, Mall franchises.

– Conversion franchises :- This involves the converting of Independent business units via franchising agreements that can be framed as strategic partnership agreements involving Trademark adoption by the franchisee as well as training systems, advertising programs and critical client service standards among other things. e.g. Professional service firms such as Deloitte (which for a while operated as Deloitte Akintola Williams).

With regard to Franchising models in Nigeria, the following types also exist :-

– The Master Franchising model :- Which involve a franchisor (or Master Franchisor)  grants another party called the Master Franchisee the right to operate its business in a given area of operations through a Master Franchise Agreement (MFA), enabling the Master Franchisee the right to grant sub-franchises to 3rd parties with a given geographical area, making the Master Franchisee an actual Franchisor for that territory e.g Kentucky Fried Chicken Nigeria.

– The Multi-unit/Area Development Franchising Model:- Which involve the grant of a franchise authorizing the Franchisee to open several business units or outlets in a given location e.g. The SPAR retail supermarket chain spread across various states in Nigeria.

– The Direct Franchising Model:- Which involves the grant of not more than a single franchise to a Franchisee in a given area e.g. Quick Service Restaurants like Mr.Biggs.

– The Management Franchising model :- This involves a developer franchisee needing operational skill set experience for the purpose of day-to-day operations of the business and subsequently hiring specialist management (which may be seconded by the Franchisor), a franchise model common with International Courier companies and Hospitality brands.

What are the key clauses to look out for in a franchise agreement?

The following clauses in a franchise agreement are to be carefully worded :

– The Restraint of Trade clause :- which must be inserted in a franchise agreement which will prevent a Franchisee from in the future being able to use trade secrets gotten from the Franchisor in a competitive capacity after the expiration of the franchise agreement.

– The Labour issues clause :- This clause must be worded to indicate that all issues relating to staff recruitment, remuneration, training and laying off are strictly within the jurisdiction of the franchisee, otherwise Joint Employer liability will be traced to a Franchisor in the event of a Labour or Industrial dispute.

– The Brand protection clause :- The use of the Franchisor’s intellectual property (Trademarks, Patents, Design Rights, Merchandise Marks, Copyrights, etc.) must be carefully defined and before signing the franchise agreement in the case of the franchisor being an International company,must have been registered in Nigeria.

Conclusion :- The issue of Franchising, even in the absence of a dedicated Legal framework, still requires a lot of Professional guidance to set up from advisory work & intellectual property registration to documentation and compliance measures. Further guidance on this topic can be gotten through sending a further consultation enquiry to ogbukalegal@outlook.com or 07011261897.

Britain may be looking for another prime minister if the decision is made based on personal rating. Yes, Liz Truss has touched the lows of  both Theresa May and Boris Johnson at the end of their tenures, just weeks into her ascension: “This is the worst poll result we have shown for a Conservative prime minister since the 2010 general election,” James Crouch, the head of policy and public affairs at Opinium, told The Guardian.

She has a really tough job just like any other national leader. There are limited variables one can play right now to ignite Keynesian growth and accelerate national productivity with inflation ravaging economies.

Before the social media era, Ms Truss would have managed the backlash of cutting tax cuts for rich people when some British citizens cannot pay for their electricity bills. But with Facebook and Twitter, the reactions are now instantaneous. While a typical conservative playbook, cutting taxes for rich people is looking like a stale idea in a world where the government is expected to do more as people struggle.

Yes, I get the idea: allow the rich to keep more of their money so that they can invest and create jobs. Unfortunately, the correlation between tax cuts and more investments is not strong! And most citizens seem to agree these days. Do not begin a government by promising to help the 1%; the 99% will not celebrate that policy no matter your intentions.

Following the backlash and economic turmoil unleashed by part of British Prime Minister Liz Truss’ “growth plan”, which has seen the pound sterling decline to its lowest in decades, the government has announced it will not be continuing with the plan to cut income tax rate.

The plan, which was a major part of Truss’ campaign promises, involves cutting the highest income tax rate in Britain – and was quickly announced by finance minister Kwasi Kwarteng.

But in a statement shared online Monday, Kwarteng said the plan “had become a massive distraction on what was a strong package”.

Indeed, Liz has reversed that own-goal policy! Now, she can go and score for England; she can do it.

Following the backlash and economic turmoil unleashed by part of British Prime Minister Liz Truss’ “growth plan”, which has seen the pound sterling decline to its lowest in decades, the government has announced it will not be continuing with the plan to cut income tax rate.

The plan, which was a major part of Truss’ campaign promises, involves cutting the highest income tax rate in Britain – and was quickly announced by finance minister Kwasi Kwarteng.

But in a statement shared online Monday, Kwarteng said the plan “had become a massive distraction on what was a strong package”.

“We just talked to people, we listened to people, I get it,” he added.

The tax policy, which included slashing the income tax rate from 45% to 40%, became the biggest test of Truss’ Conservative government due to the economic turmoil it inspired.

The tax policy came with cuts of £45 billion that would have been the biggest in 50 years if not that it came with devastating impacts that has forced the government to make a U-turn.

It pushed the pound to a historic decline against the US dollar, sparking the burden of increased borrowing for the government as the UK market went into chaos. As a result, mortgage rates soared, and some pension funds struggled to remain solvent.

Kwarteng told the BBC Breakfast the proposal was “drowning out a strong package”, including support for energy bills, and cuts to the basic rate of income tax and corporation tax.

The most controversial aspect of the plan is the decision to grant a big tax cut to high earners while millions of others are battling to pay increasing energy and food bills.

The plan to scrap the top rate of tax had remarkably been opposed by the markets, other parties and a growing number of Tory MPs. The inside criticism from Conservative Party members defied the warning of party chairman Jake Berry, that Tory MPs who voted against the prime minister’s tax measures would lose the whip – being kicked out of the parliamentary party.

Senior Tory Michael Gove hinted on Sunday he would not vote for the plan when it came to Parliament. He said, “I don’t believe it’s right”. The former cabinet minister added that the PM’s decision was “a display of the wrong values”.

The pressure intensified on Truss and Kwarteng over the weekend after their former ministerial colleagues criticized the plan, signaling a potential escalation of the revolt within the Conservative party.

The U-turn was likely forced by the growing criticism, a sign that Truss and Kwarteng will face a high hurdle getting the plan approved in the parliament.

The pound moved up on the news that the abolition of the top rate of income tax was being reversed, briefly climbing more than a cent against the dollar to $1.1263.

But as CNN noted, it will likely only reduce the overall size of the tax-cutting package by £2 billion, leaving the government yet to reassure markets that it has a solid plan to fund the rest.

While the U-turn has marked an early mortifying downclimbing for Truss’ government, Gove said it’s welcomed.

“It’s better to act, it’s better to reverse ferret on something that’s causing a problem like this, and it sends a very important signal to the public and also to the markets that we are serious about sound money,” he told the BBC.