Lease Agreements for Franchises:

Franchisors are usually responsible for identifying potential franchise locations, negotiating terms of a lease and entering into lease agreements with the landlord ("the head lease").  A key term of any such lease agreement is one allowing the premises to be subleased to a franchisee. The franchisor will then enter into a sublease agreement with the franchisee which will allow them to occupy the premises for the term of the sublease. The provisions of the sublease will be consistent with the terms of the head lease. The franchisee's obligations under the sublease will typically mirror the franchisor’s obligations under the head lease.

The continuation of the sublease agreement is contingent upon the head lease remaining in effect. Should the head lease be terminated or the term lapse, the sublease agreement will also come to an end.  In these circumstances, the franchisee may be offered an alternative premise for the operation of the franchise and the Franchise Agreement will be varied to reflect the new location, or alternatively, the Franchise Agreement may also come to an end.

It is very important a franchisee understands the provisions of the head lease and sublease prior to entering into the Franchise Agreement with the franchisor. They should be aware of the term of the lease, the period of any options to renew, the steps required of the franchisor during lease negotiations and the potential outcomes if a lease cannot be renewed.  Our team of solicitors can advise you of these important issues and the risks to you and your prospective business should the lease end.

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.