Commercial

Navigating Franchise Law: Australian Guidance

Franchising

Franchising is complex and heavily regulated. We will help you to avoid the legal traps.

Franchising is a unique relationship. It requires a high degree of trust given that the franchisor and franchisee both play a key role in attaining success. For this reason, it is critical that the foundations for the relationship are set appropriately, and that each party is kept accountable.

Are you a franchisor? We can assist you with:

establishing a new franchise network;
preparing, amending and modernising your Franchise Agreement;
managing your existing franchise network – including dealing with incoming and outgoing franchisees;
advice on compliance with the Franchising Code of Conduct;
competition and consumer law issues;
resolving disputes with franchisees; and
employment, leasing, tax and other commercial issues.

Are you a franchisee? We can assist you with:

advice on your Franchise Agreement;
advice on your premises lease;
resolving disputes;
buying or selling a franchised business; and
employment law, leasing, tax and other commercial issues.

Approach

Our lead contact, Greg Thomas, acts for several prominent franchisors. He also acts for a significant number of franchisees.

Greg has a remarkable track record and approaches every matter with care and pragmatism. His wealth of experience helps him to find solutions to the most complex franchising issues.

Irrespective of whether you are a franchisor or franchisee, our team will work tirelessly to protect your best interests.

Fill in the form and someone from our team will be in contact shortly.

Do you assist franchisees?

Yes, we regularly assist franchisees. Please see above for more detail regarding the services we provide.

Do you assist franchisors?

Yes, we act for several large franchisors. Please see above for more detail regarding the services we provide.

What about ‘licence’ arrangements?

We assist with these arrangements too.

There is a fine distinction between a franchise and a licence arrangement. We recommend that clients seek advice to ensure that they understand the nature of the arrangement and the consequences of its categorisation.

If a franchise agreement is incorrectly described as a licence agreement, there is risk that there could be:

false and misleading representations in contravention of the Australian Consumer Law; and
financial penalties under the Franchising Code of Conduct for failure to comply with its various requirements.

What is the ‘good faith’ obligation?

Each party must act towards another party with good faith.

The duty of good faith generally includes an obligation to cooperate in achieving the objectives of an agreement, in compliance with honest standards of conduct and in compliance with standards of conduct that are reasonable having regard to the interests of the parties.

Conduct may lack good faith if a party acts dishonestly, for an ulterior motive or in a way that undermines or denies the other party the benefits of a contract.

Importantly, the Franchising Code of Conduct expressly states that this obligation does not prevent a party from acting in their legitimate commercial interests.

Our team are well placed to assist with questions regarding the good faith obligation.

How do you charge?

Trust is one of our core values. We pride ourselves on not causing 'bill shock'. Our usual approach is to provide you with a clear and transparent fee quote to ensure that there are no surprises. You can then make an informed decision about whether you want to proceed or not.

What is a franchise agreement?

A franchise agreement is a contract between the franchisor and franchisee. It sets out the legal terms which govern the franchising relationship.

The franchise agreement is a significant document in the franchising relationship, as it is the formal arrangement under which the franchisor is granting the franchisee the right to conduct business under a specific franchising system or marketing plan.
An effective franchise agreement should clearly define the important parts of the franchising relationship such as the term of the agreement, the fees owed by the franchisee and the rules franchisees must follow if they want to sell their franchised business.

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What do franchisors have to disclose to franchisees?

Given the power imbalance between franchisor and franchisee, franchising is a highly regulated space.

The Franchising Code of Conduct imposes significant disclosure obligations upon franchisors. Disclosure obligations cover a broad range of matters such as details of existing franchises, intellectual property and fees. These matters must all be included in the franchisor’s disclosure document. We regularly assist franchisors to ensure their compliance with disclosure obligations.

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Do I need to review my existing franchise documents regularly?

The Franchising Code of Conduct is amended on a frequent basis. It is important to regularly review your franchising documents, to make sure they are compliant with the most recent version of the Franchising Code of Conduct.

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