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Franchising

Franchising in Australia is big business. There are some 1120 franchising outfits and more than 79,000 franchisees.

High profile cases such as 7-Eleven, Dominos and the Retail Food Group mean that enquiries into the franchise sector are ongoing and the laws, including the Franchising Code of Conduct, are regularly reviewed and updated.

We have acted for numerous franchisors and franchisees over the years giving us a strong understanding of the realities of owning, buying, selling and setting up franchises. Our work can include a review of all legal matters associated with a franchise, including business structuring, lease and property issues and dealing with employees.

What we do

We can assist with all franchising requirements including:

Compliance with the Franchising Code of Conduct and consumer protection legislation;
Drafting and reviewing franchise agreements, disclosure documents, information statements and other related documents;
Advising on entry into a franchise, including review of franchise agreements and negotiating with the franchisor;
Advising on the sale or purchase of an existing franchise;
Advising on business structures for purchasing a franchise;

Managing the expansion and sign-up of new franchisees;
Advising on the lease, sublease or licence of the franchised premises;
Advising on Fair Work legislative requirements and employment issues;
ACCC compliance (both competition and consumer protection);
IP strategy, trade mark registrations, licensing;
Advising on restraints of trade and enforceability;
Mediations under the Franchising Code of Conduct; and
All types of disputes.

The MV difference

We can collaborate expertise across teams so that our commercial, property and employment lawyers work together to resolve your matter. Specialisation across these practice areas means that we can manage all aspects of your franchise business.
Our commercial team works closely with the property team to prepare land and business transactions together.
We can manage the legal affairs of franchises across all jurisdictions in Australia.

FAQs

What do I need to provide to prospective franchisees before they sign on?

As a franchisor, you must provide the following documents to prospective franchisees before they can become franchisees:

Information Statement;
Franchise Agreement (in its final form);
Disclosure Document; and
Franchising Code of Conduct.

After you have entered into a franchise agreement as a franchisee, do you have any cooling off rights?

Yes, you have the right to change your mind within seven days of entering into a franchise agreement. The franchisor must give you a refund of all money paid, minus their reasonable expenses.

How often must a franchisor update their disclosure document?

The disclosure document must be updated once every year, within four months of the financial year ending. This is usually 31 October, though for entities on a different financial year, it will be four months after that financial year ends. There is an exception to the requirement to update, where you did not enter into more than one franchise agreement in the previous year and do not intend to enter into further agreements in the following year.

As franchisor, can I be liable for the conduct of my franchisees?

Yes, as franchisor there is a possibility that you could be liable for breaches of employer obligations under the Fair Work Act. You will only be liable where you have a significant degree of influence or control over the franchisee’s affairs and you knew, or should reasonably have known, that a contravention would occur.

Resources

Related e-briefs

Attention All Franchisors and Corporate Groups! You Are Now Liable for Breaches of the Fair Work Act

External Resources

Australian Competition & Consumer Commission

Australian Securities & Investments Commission

Franchise Council of Australia

Meyer Vandenberg Lawyers