Franchising involves a business owner (franchisor) granting to another person (franchisee) the right to carry on a business supplying goods or services under a specific system or marketing plan as created or controlled by the franchisor under their trademarked business name.
The Franchising Code of Conduct sets out a range of mandatory requirements in relation to the entering into of a franchise agreement, including the form and content of disclosure documents and mandatory clauses that must be included within the franchise agreement. The Code also provides protection for franchisees in relation to cooling off periods, the management of marketing funds and dispute resolution.
It is critical that franchisees assess the prospective franchise opportunity carefully before signing any franchise agreement, and in doing so should obtain comprehensive legal advice. A franchisee should be aware of the following:
- The background of the franchise, in particular unusually high turnover of ownership;
- The upfront fees and ongoing franchise fees, exit fees and royalties;
- The extent and duration of the use of intellectual property, copyrights, trademarks;
- Commercial leasing requirements, in particular the term and renewal options of such lease, which should ideally coincide with the franchise
Dwyer Durack have extensive experience in franchise law. We can assist with:
- Entering into a franchise agreement (drafting and reviewing);
- Assisting an existing franchisee or franchisor;
- Expanding your business into a franchise; or
- Franchise disputes.
Owning a franchise can be both profitable and rewarding, however properly planning the purchase with appropriate due diligence is critical to any success. If you have any franchising queries, please contact our Perth lawyers today.