Franchising

Franchising

Many businesses operate as a franchise, however, that does not mean this system is suitable for all businesses.  Before entering into any Franchise agreement it is important that you speak to one of our solicitors so they can provide you with the right advice.   We will work with your other professional and business advisors so you are confident that you are making an informed decision.   If you do not have access to other professional and business advisors we can recommend reputable service providers known to us.

 

 

 

Franchised businesses are regulated by the Franchising Code of Conduct which operates under the umbrella of the ACCC. The Code determines the relationship between a franchisor and franchisee. Once parties enter into a franchise agreement they are bound by the Franchising Code. Below is an outline of that code

 

For an agreement to be classified as a franchise agreement it must exhibit all of the following :-

 

 

 

1.      The code dictates the rights and obligations of a franchisor and includes the requirement for a franchisor to provide a copy of the code and a disclosure statement to a franchisee at least 14 days before the franchisee enters into a franchise agreement, or agrees to enter into a franchise agreement or pays a non refundable deposit.

 

2.      The franchisee must also provide a signed statement to the franchisor acknowledging that the franchisee has received, read and has had a reasonable opportunity to understand the disclosure document.

 

3.      The disclosure statement must also be provided by the franchisor to the franchisee at specific times during the term of the franchise.

 

4.      Specific information must be provided in the disclosure statement as the purpose of the statement is to provide a prospective franchisee or an existing franchisee with sufficient information so the franchisee can make an informed decision about entering into or extending the franchise agreement.

 

5.      The code requires the franchisee to obtain advice from an independent legal, accounting and business advisor about the franchised business and agreement and also requires the franchisee to provide a signed statement to the franchisor acknowledging that the franchisee has obtained that advice or has been told to obtain that advice but has chosen not to obtain it.

 

6.      The code also details the conditions that must be contained in a franchise agreement. and details the procedure for dealing with complaints including mediation.

 

The obligations and rights of the parties that are regulated by the code include:-