A franchise may be the key to your business success. If you’re a franchisee, it’s often an effective way to establish operations with the backing of an existing business model and product. If you’re a franchisor, it may help you to grow your business without the risk of overstretching.
A successful franchising arrangement requires legal advice from the beginning of the process. It’s critical to understand your rights, obligations and financial exposure. Our franchising legal team provides advice and services at all stages of the franchise lifecycle, including:
- Before entering into the franchise agreement
- During the franchise term
- At the end of the franchise term
Supported by our commercial lawyers, our franchising team is known for its superior services and advice. We can help your business thrive.
We act for both franchisees and franchisors including:
- Franchisors of existing franchise systems
- Franchisors of new and emerging franchise systems
- Local and international franchisees of all sizes
Our connections with professional franchise consulting and accounting firms significantly advantage our clients. Our ability to refer our clients to these firms has cemented our reputation for consistent and coherent franchising services.
We work in all aspects of franchising law, including advice and services for:
- Franchising agreements, disclosure documents and other legal documents
- Franchise sales and purchases
- Master franchising
- Strategic planning and advice
- Compliance with the Franchising Code of Conduct
- Compliance with the Competition and Consumer Act
- Dealing with the Australian Competition and Consumer Commission
- Intellectual property issues including strategy, IP management in Australia and overseas, and trademark registrations
- Asset protection
- Breach, termination and dispute notices
- Dispute resolution
Franchising law FAQs
Starting a franchise is a significant decision, regardless of the size of your operation and budget. While it’s a great way to expand and grow a business, it’s not the right option for some. It’s essential to take the time to weigh up the pros and cons.
Our franchising lawyers can help you work out whether a franchise suits your needs and which franchise structure would work best for your business.
The franchise structure can hold the key to your business’s success: it’s a fundamental component of your business model. The consequences and effects of the structure will last for the life of the franchise.
Getting this legal advice early in your franchising venture is an essential building block to your long-term success. We’re ready to help you with expert advice and recommendations, as well as drafting all the necessary documents, for example:
- Franchise agreement
- Disclosure document
- Premises licence agreement
- Any other documents
The Franchising Code of Conduct regulates all Australian franchising agreements and systems. Compliance with the Code is mandatory.
Among other things, the Code requires that:
- The prospective franchisee receives disclosure documents with information about the franchise
- The franchising agreements must not release a franchisor from general liability
- The franchising agreement must not waive any verbal or written representations made by the franchisor
Putting an agreement in writing clarifies the terms, setting out how the relationship will work, remuneration and other vital elements.
A properly drafted franchise agreement is powerful protection for your franchise business. Ideally, it should be drafted to:
- Enable business growth
- Protect your interests
- Limit potential liabilities
The franchise agreement should also:
- Identify the franchisee and the franchisor
- Include the rights and obligations of the parties
- Identify how the franchise operates
- Detail the parties’ financial obligations
- Comply with the Franchising Code of Conduct
Typically, a franchise agreement will:
- Set out the rights of the franchisee to use the franchisor’s:
- Intellectual property
- Name and branding
- Systems and methods
- Detail the franchisee’s obligations to:
- Offer specific products or services
- Maintain quality and standards
- Promote the business
- Use particular operational methods
- Specify the franchisor’s obligations to provide:
- Support and training
- Advertising and promotional support
- Give details of payments or royalties, for example:
- What is to be paid
- Payment structure and timing
- Set out any operating restrictions
- Detail any resale and termination rights
A disclosure document is crucial for both franchisees and franchisors.
The disclosure document provides:
- Mandatory information to a potential franchisee about the franchise system; and
- A summary of the terms of the franchise agreement
The purpose is to give the franchisee enough information to make an informed decision about whether to enter the franchise.
As a franchisor, the Franchising Code of Conduct requires you to update your disclosure documents regularly. You must provide copies to any potential franchisees before entering into a Franchising Agreement.
Perhaps your franchise business operates out of a permanent location, for example a café or shop. In that case, you may need a lease or a premises licence agreement. But which one will apply?
Leases and licence agreements are similar in many ways, but there are also some critical differences. Victorian leases:
- Give you exclusive possession of the premises
- Are regulated and protected by the Retail Leases Act
Although they don’t have similar protections, Victorian licenses are more flexible:
- They can be terminated early with written notice
- They can be adjusted without terminating the agreement
- They’re commonly used for fast-food franchises (because if the franchise agreement is terminated, a new franchisee can take over the premises)
The best option will depend on the circumstances and whether you have a greater need for flexibility or increased security.
Buying a franchise is an exciting time. There are many advantages, including an established operating system and a strong reputation. It’s also a way of becoming your own boss. But investing in franchising is complex, especially if the financial stakes are high.
Franchising and franchising agreements touch on many legal issues including:
- Australian consumer law
- Contract law
- Intellectual property law
- Employment law
- Franchising Code of Conduct
The most effective way of navigating these issues is to seek legal advice from the beginning of the franchising process.