Franchising Law

franching lawDundas Lawyers advises Franchisors and Franchisees on all aspects of “Franchising Law” and compliance with the Franchising Code of Conduct (Code) as enforced by the Australian Competition and Consumer and Commission (ACCC). The activities of Franchisors and Franchisees are regulated pursuant to the Competition and Consumer Act 2010 (Cth) (Act) which has superseded the Trade Practices Act 1974 (Cth).

Services for Franchisors

Entity selection and intellectual property (IP) protection

Prior to the establishment of a Franchise System we take the time to review the structure and form of the intellectual property which is being licensed and advise on the most appropriate ways to protect and exploit the commercial value of the IP. We work diligently to ensure that the business requirements are taken into consideration in the Franchise Agreement in addition to the mandatory legal elements.

Creation of Franchise Systems

Each Franchisor, Master Franchisee and Franchisee must have a Franchise Agreement. The term Franchise Agreement is defined in section 4 of the Code. We therefore draft and settle:

  • the Franchise Agreement;
  • the Long or Short Form Disclosure Document as the case requires;
  • any ancillary documents as required by the Code or the specific needs of the Franchise System; and
  • update Franchise Agreements and manage the Franchisor’s disclosure obligations as required by the Code.

Franchisee development

In order to best exploit a Franchisor’s IP, we assist to grow the Franchisor’s network, by:

  • issuing Short or Long form disclosure documents to potential Franchises (as required) and manage the Franchisors document processing obligations ensuring that the statutory time limits are met;
  • conduct negotiations and draft amendments to the Franchise documents as appropriate;
  • advise on issues arising from the application of the Franchisor’s business to the Code;
  • advise on issues associated with dispute resolution, and if appropriate attend mediation;
  • where appropriate, negotiate and settle leases over real property; and
  • manage requests to transfer or novate Franchise Agreements for Franchisees.

Requirements for the Franchisor

There are certain distinct elements that a Franchise Agreement must possess as defined in section 4 of the Code to be a Franchise. These include:

  • the Franchisor granting the Franchisee the right to carry on the business of providing goods or services under a “system” or marketing plan determined or largely controlled by the Franchisor;
  • the right to use the Franchisors brand which is manifested in one or more registered trademarks;
  • the franchisees being required to pay a fee or fees of various types to the Franchisor before and during the conduct of the business which may include:
    • an initial capital investment fee;
    • a payment for goods or services;
    • a fee based on a percentage of gross or net income; and
    • a training fee or training school fee.
  • the Franchise Agreement being for a limited term and provision is made for the extension of the term.

Franchise Agreements must include all of the above elements.

Further references

Related articles by Dundas Lawyers

Managing pre-contractual representations in franchising

When is your licensee really a franchisee?

Changes to the Franchise Code of Conduct

Franchisors’ end of term arrangements – valuation of goodwill versus risk of competition

What is a franchise agreement?

Marketing funds for franchises

Renewing or extending a Franchise – what’s the difference?

Useful cases

Rafferty v Madgwicks [2012] FCAFC 37

Useful links

Franchise Code of Conduct
Franchise Code of Conduct Compliance Manual

If you would like further information about how Dundas Lawyers can assist you with any aspect of Franchising please contact:

Franchising lawyers

Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
Telephone: (07) 3221 0013
Facsimile: (07) 3221 0031
Mobile 0419 726 535

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