In franchising, as well as in other forms of distributions, monitoring the actions of the franchisee is a costly affaire. This is also the case for the Danish furniture store, IDdesign, who has several franchisees operating in the Middle East. It is a crucial fact that the consequences of not monitoring the actions of the franchisee can result in a discredit of the brand value of the Franchisor. The purpose of this thesis is therefore to recommend several measures, with the purpose of securing that the franchisee is motivated, thus making him act in accordance with the franchise contract. Measures are used as a more effective alternative to monitor the franchisee. Measures can be seen as anti-shirking measures or alternatively, as safeguards. To secure how IDdesign can create a more efficient motivation for their franchisee to act in accordance with the franchise contact, the thesis recommends that IDdesign implement four new approaches to their franchise contract; A Call option that gives IDdesign the right, at any time after the first four years of the contract, to exercise its option, thereby terminating the contract with the franchisee. At the same time it is also recommended that IDdesign offers the franchisee a Put option which gives them the right, at any time, to terminate the contract. By exercising the call or put option, IDdesign is obligated to pay remuneration to the franchisee, depending on the yearly level of his purchased goods from the suppliers of IDdesign. A higher requirement of the monthly royalty payment IDdesign must remove the juridical term 7.28 and instead implement a term that gives IDdesign the right to control the franchisee by using mystery shoppers Finally, IDdesign should implement a juridical term that obligates IDdesign to deliver and mount the needed inventory, so that the franchisor I able to open a store that is identical with the rest of the IDdesign stores. In return the franchisee must pay a monthly payment to IDdesign. These four recommendations should be seen as a complete package, which both include anti shirking measures as well as safeguards. In the last part of this thesis it is discussed and recommended how IDdesign should formulate the juridical terms of these four recommendations. The main focus in this discussion is to secure that the recommended terms are formulated in compliance with the Code of Ethics for franchising and current Danish law.
|Educations||MSc in Commercial Law, (Graduate Programme) Final Thesis|
|Number of pages||119|