Business continuity planning involves the identification of
areas of risk and putting in place strategies to minimise the
impact of these risks if they eventuate. In the current
environment, a significant risk faced by most franchise networks is
the prospect of a key supplier or a franchisee (or number of
franchisees) ceasing to trade due to insolvency.
All businesses should have a formal and comprehensive business
continuity plan in place as part of their risk management
processes. The plan should be a simple document that is tailored to
the business and provides practical strategies to follow in a
crisis. The plan needs to address all the major risks to the
business (including fires, floods, storms, explosions and key
suppliers or customers ceasing to trade) and have strategies in
place to guard against or mitigate these risks.
As a minimum a business continuity plan needs to include:
an identification of the essential business requirements
an identification of the major risks facing the business
an assessment of the impact each risk would have on the
a strategy to respond to, manage, and recover from an
From a contractual perspective there are a number of steps that
can be taken to support a business continuity plan. These
ensuring you have a guaranteed right to receive a minimum
quantity of key products (or at least guaranteed remedies if supply
cannot be guaranteed or alternative solutions to deal with short
restricting the right of a supplier of key products to cease
supply (or at least allowing for a transition period)
including a retention of title clause in your terms of trade
with franchisees to ensure you have a right to repossess goods that
have not been paid for, and
including a force majeure clause in your supply contracts to
ensure that you are protected against a failure to supply for
reasons outside your control.
Business continuity planning is essential to identify and
mitigate against the major risks faced by your business. Preparing
for the unexpected and planning to minimise risks in an
organisation is a difficult task but one that is becoming
increasingly important in the current economic environment. To
ensure that all significant risks are identified when establishing
a business continuity plan, and that the most appropriate and
practical strategies are put in place, a range of stakeholders
(including legal and financial advisors) should be included in the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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