Franchise Agreements:

When an application to become a franchisee has been accepted, the franchisee and franchisor will enter into a Franchise Agreement. The Franchise Agreement is a Contract that sets out the obligations and rights of the franchisor and franchisee.

The Franchising Code of Conduct prescribed by the Competition and Consumer (Industry Codes- Franchising) Regulation 2014 sets out the terms required of a Franchise Agreement including disclosure requirements, marketing fees and expenditure required of a franchisee, terms relating to the transferal of the franchise, termination of the Franchise Agreement and the dispute resolution/ complaints handling procedure.

The franchisor typically exercises the following powers under the Franchise Agreement:

• Approving applications to become a franchisee based on eligibility criteria developed by the franchisor
• Providing the legally required disclosure materials and information to the franchisee (for example details of litigation against the franchise)
• Negotiating and entering into the leases for premises from which the franchise will operate and then subleasing those premises to the franchisee (unless the franchisor owns the premises)
• Marketing the franchise and any promotional campaigns adopted by the franchise
• Determining which goods and services will be available at the premises
• Providing and maintaining equipment required at the premises
• The franchisor continues to be the legal owner of all intellectual property pertaining to the franchise and can make any decisions relating to the intellectual property

The franchisee often exercises the following functions under the Franchise Agreement:

• Providing the legally required disclosure materials and information to the franchisee (for example business experience)
• Operating the franchise on a day-to-day basis
• Reporting outcomes to the franchisor, for example, financial results
• Complies with the terms of any lease or sublease agreement for the premises
• Financial contributions to the marketing fund of the franchise

If you are considering purchasing a franchise, we recommend that you obtain legal advice on the proposed Franchise Agreement to ensure that you clearly understand your rights and obligations and how you will be affected should events occur that may be beyond your control, for example if the lease for the premises cannot be renewed.

If you wish to speak to one of our Franchising Advice & Disputes Lawyers, please contact our firm by telephone on (02) 9233 4048 or send an email to info@navado.com.au.

This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Legal Advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.