Franchising – buying, selling, setting up or restructuring

The Franchising Code of Conduct (the Code) and the Competition and Consumer Act (previously the Trade Practices Act) determine whether or not an arrangement is a franchise and, if so, the Code will govern the relationship between franchisor and franchisee.

An arrangement may be a franchise even though all of the documentation, and the parties themselves, refer to the arrangement as a “licence” or “distribution agreement”.

A majority of franchise systems with the Code when they are first set up but, due to change of ownership, lack of understanding, passing of time, or simply due to a failure to have any compliance procedure in place, the system no longer complies.

Purchasing

If you purchase a “non-compliant” franchise you may “inherit” problems, and the associated risks, including personal liability.

Selling

If you are selling a franchise that does not comply with the Code, you may not achieve the purchase price you expect as the purchaser may reduce the price offered as they may have to “fix up” any problems they may ask you , they may ask you to fix up any problems which may delay the purchase, or the purchaser may “walk away” from the purchase

Our lawyers have had extensive franchising law experience acting for a wide range of clients ranging from “mum and dad” small businesses to large franchisors, such as Eagle Boys Dial-A Pizza Australia and Sleepy’s, including:
 

• reviewing, advising on and redrafting all franchise documents including franchise agreements, disclosure documents, notices and associated documents such as leases, licences, guarantees and indemnities;
• setting up small and large franchise systems “from scratch” such as Planet Power;
• risk identification (due diligence) and risk minimisation;
• dispute resolution (including mediation and litigation);
• buying and selling franchised businesses and franchise systems (including due diligence);
• compliance including setting up systems and procedures to minimise the likelihood of breaches of the Code and the Competition and Consumer Act;
• radio, television, internet and  website advertising;
• investigations by, and complaints to, the Australian Competition and Consumer Commission (ACCC).

We can help you if:
 

• You want to buy a franchised business
• You are an existing franchisee who:
   
  • Wants to sell your business;
  • Wants to purchase another franchise in the same, or another, franchise system
  • Is in a potential, or actual, dispute with the franchisor;
• You are an existing franchisor who:
   
  • Wants to sell all or part of the franchise system;
  • Is in a potential, or actual, dispute with one or more franchisees;
  • Needs assistance to work through, and comply with, the regulatory “nightmare”.