Franchising:

Franchising is where there is a primary company ("franchisor") which is set up in multiple locations, each managed by independent business owners ("franchisees"). Two primary benefits of becoming are franchisee are:

1. The company name would usually have an existing client base and good will;
2. The franchisor provides assistance to the franchisee, for example, by performing functions such as marketing, engaging suppliers, setting up promotions, establishing the list of services/ products to be provided to customers and often setting the pricing for such services/products.

Franchising is now common across many industries including health and fitness, hospitality through to home maintenance.

In order to become a franchisee you need to be approved by the franchisor who often looks at the business acumen of the prospective franchisee, experience in the relevant industry and their character.

Once a franchisor accepts an application lodged by a prospective franchisee, the parties enter into a Franchise Agreement and other related documents as prescribed by the company. These documents will set out the obligations, functions and entitlements of both the franchisor and franchisee, and it is usually these matters which become disputed during the term of the agreement. Some common disputes include:

1. What is required of the franchisor in attempting to renew/ secure a new lease for the franchisee's place of business;
2. Who is liable for the maintenance and replacement of equipment and failures to exercise these functions;
3. Whether certain promotions or marketing campaigns have the effect of disadvantaging certain franchisees;
4. Disputes about any financial contributions/ assistance to be provided by the franchisor;
5. How the Franchise Agreement can be terminated and disputes about the renewal of the Franchise Agreement;

Where a dispute arises, alternative dispute resolution mechanisms such as conciliation, mediation and negotiation are common, and are often mandatory under the Franchise Agreement or other franchising documentation. Once the mandatory dispute resolution processes have been exhausted, it may be possible for legal proceedings to be brought against the party in breach of contract.

Should you require any assistance do not hesitate to contact our firm by telephone on (02) 9233 4048 or send an email to info@navado.com.au and arrange an appointment to see a solicitor. 

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.