Both franchisors and franchisees need to be fully aware of their legal obligations to avoid inadvertently breaking the law which is governed in Australia by a Franchising Code of Conduct
Why Choose Franchising?
As a business model franchising has a number of appealing aspects for both franchisors and franchisees.
Firstly the franchise model provides a means for a franchisor to grow a business without needing to have at their disposal the very large amounts of capital that are often needed to fund a full infrastructure development.
Secondly, it allows individual business owners (franchisees) to buy into a successful business model that has a proven formula. Even though franchisees are bound by the terms of the franchise agreement they still have a degree of independence while being able to access all of the benefits that can be achieved by being part of a larger business structure or organisation.
What Laws Apply to Franchise Agreements?
All Australian laws that apply to commercial transactions including trade practice laws apply to franchise agreements in Australia. In addition, a Franchising Code of Conduct operates to govern the relationship between franchisors and franchisees.
The provisions of the Fair Work Act 2009 (Cth) (FWA) also apply to franchise arrangements and provide that a franchisor may be penalised for a failure by one or more of its franchisees for failing to comply with the Act.
From 12 November 2016 the Unfair Contract Terms Regime (UCT Regime) applies to cover standard form contracts entered into with ‘small business’.
The UCT Regime applies to any standard form small business contract for the supply of goods and services, including financial services or products or an interest in land. A wide range of contracts are affected including franchise agreements. The UCT Regime adds to the already extensive compliance and regulatory obligations already affecting franchisors under the current Franchising Code of Conduct.
As the laws governing franchise agreements continue to evolve and grow it is important, whether you are a franchisor or franchisee, that you have access to specialist legal advice.
Our experienced franchise specialists are able to assist and advise in respect of all aspects of franchising arrangements including:
- Reviewing and updating existing franchise agreements and updating and drafting new agreements;
- Advising in relation to ancillary documents such as disclosure documents;
- Regulatory compliance including obligations under the Franchising Code of Conduct;
- Options and conditions of sale including on-selling your franchise
- Employment obligations and responsibilities both under the franchise agreement and generally;
- Intellectual property issues;
Commercial and retail leases necessary to operate your franchise business;
- Negotiating with your franchisor/franchisee;
- Renewals and termination of franchise agreements; and
- Resolving franchise disputes including advising in respect of litigation and alternative dispute resolution.
Being involved in a franchise arrangement can be satisfying and rewarding both personally and financially. However, it is essential that you understand both your obligations and your rights in relation to any franchise agreement. We look forward to working with you to help you achieve success.
At Ivy Law Group we’re committed to sharing useful information regularly. We understand for some people the importance of getting some context around your legal issue before engaging legal help!
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