Setting up a Franchise:

A franchise is where a single business operates from various locations which are managed on a day to day basis by “franchisees” who have essentially purchased that store from the “franchisor”. The franchisor maintains a significant degree of control over the operation of the different stores by the franchisee, including determining the goods and services offered, marketing campaigns and the franchisor retains ownership of all intellectual property and trademarks of the business.

Many different types of businesses have expanded to become a franchise ranging from businesses in the hospitality, building, cleaning and beauty industries.  The advantage of setting up a franchise is that it allows the expansion of a business and overcomes the logistical problem of the franchisor managing and operating multiple stores concurrently. However, there are also benefits to the franchisee in that they are purchasing a business which has pre-existing good will, the franchisee does not usually have to be involved in the marketing of the business which allows them to focus on building the customer base in their location and increasing its profitability.

When becoming a franchisor, there are numerous statutory obligations which must be met. The Franchising Code of Conduct prescribed by the Competition and Consumer (Industry Codes- Franchising) Regulation 2014 sets out the obligations of the franchisor such as what information they are required to disclose to potential franchisees. A franchise relationship between a franchisee and franchisor is also regulated by a contract known as a Franchise Agreement. The terms required of a Franchise Agreement including 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 are also set out in the Franchising Code of Conduct.

If you are considering setting up a franchise, it is important that you obtain legal assistance from the outset to ensure that you satisfy your legal obligations under the Franchising Code of Conduct and other related legislation. This will require the drafting of your Franchise Agreement and other relevant documents such an application to become a franchisee. It is also vital to ensure that you take steps to adequately protect your own personal interests and assets. The area of asset protection can be complex, and our dedicated team of solicitors can advise you of the options available to you and can liaise with your financial advisor to identify the best asset protection strategy. 

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.