How to Franchise Your Business or Concept

Start-Up Franchisor and Franchisor Legal Services

A Guide for Franchising a Business and Franchise System Setup

Who we are

Greyson Legal are experienced franchisor lawyers with the skills, knowledge and expertise to help you. For a confidential and obligation free discussion about our Franchisor legal services, contact Greyson Legal.

Greyson Legal are leading franchise lawyers. The Principal of the firm has been providing legal advice and franchise consulting to participants within the franchise sector for close to 20 years.

We represent various Franchisor clients with franchised outlets and other licensing interests across Australia and internationally.

Franchising is a proven model for business expansion, through a system based on standardisation and replication. If you are a budding entrepreneur or in the business start-up stage taking a new concept to market; or an existing business owner - franchising is a model which can be adopted as a business growth strategy and as a brand expansion mechanism.

In this Guide for Franchising a Business and Franchise System Setup, we:

  • deal with a number of the Franchisor legal services Greyson Legal provides as part of setting up a franchise model; and
  • comment on a variety of issues to consider when creating and developinga franchise system.

The guide is a summary only and appropriate legal advice in relation to your specific requirements should be obtained. Contact us for further details.

SOME OF THE FRANCHISOR CLIENTS WE PROUDLY REPRESENT:-

Goop Guys
Goop Guys, Caloundra
IRON ZUU, The ZUU
Iron ZUU, Burleigh Heads
Pest Control Queensland
Pest Control Queensland, Coolum

What we do - Strong Foundation

A franchise system should be based on a strong foundation supported by careful planning and appropriate due diligence.

At Greyson Legal, we can assist you to ensure that necessary planning and due diligence is carried out.

strong foundation, concrete, concrete blocks, stepping stones

Preliminary Franchise Set-UpPhase

As part of the preliminary Franchisor legal service we provide, Greyson Legal can:

  • provide necessary guidance;
  • attend various consultations with you to understand your business or concept and requirements for the franchise model;
  • generally explain the franchising process;
  • advise on the different business structures that can be  utilised;
  • liaise with your accountant as part of the structuring stage, whether that is in relation to registering companies or establishing trusts;
  • advise you about statutory and regulatory compliance requirements;
  • discuss Franchise Association membership;
  • (given intellectual property rights of a franchise are one of the most valuable assets of the franchise system), we discuss how to use your existing (or intended) intellectual property and advise on strategies to protect and grant rights of use with respect to that intellectual property. This may include:
    • conducting an initial IP Audit;
    • clarifying IP ownership;
    • undertaking IP searches;
    • filing applications for intended trademarks;
    • checking the currency of trademark registration;
    • assigning existing trademarks;
    • drafting IP licences;
    • etc.

Franchise Documentation Phase

There are a range of legal and other documents that need to be prepared. Greyson Legal's Franchisor legal services extends to: 

  • assisting with preparation of pre-franchise or foundation documents, such as:
    • Franchisee expression of interest forms;
    • Franchisee application forms;
    • Deposit forms;
    • Confidentiality Agreements;
    • Procedures or Operations Manuals;
    • Training, HR and other Manuals; 
    • Franchisee Information (or Introduction) Kits;
    • etc
  • discussing the specific terms and conditions required in the Franchise Agreement and related documents, including:
    • Franchise fees;
    • Royalties;
    • Marketing fund;
    • Other fees;
    • Franchisor rights and obligations;
    • Franchisee rights and duties;
    • Restraints of trade;
    • Confidentiality;
    • Intellectual Property;
    • etc
  • drafting key agreement and documents, such as:
    • the Franchise Agreement;
    • Code compliant Disclosure Document;
    • associated Code compliant documentation;
    • personal guarantees;
    • security deeds;
    • ancillary licenses (as required);
    • etc

Managing the Franchise Network

Once the franchise system is established, Greyson Legal assists its Franchisor clients with on-going management of the franchise network through:

  • actively keeping you informed so you are aware of changes to the law which may impact on you, the Franchisees or the franchise system;
  • assisting with Franchise dispute resolution;
  • overseeing any Franchised business re-sales including:
    • preparing all necessary franchise and other documentation required for the transfer, such as:
      • any Deeds of Assignment;
      • new Franchise Agreements (if required);
      • Code compliant Disclosure Documents;
      • etc

Where an existing Franchisee is seeking to sell their Franchised Business, we:

  • provide you with guidance regarding the Franchised Business conveyance process;
  • advise you about your rights and obligations in relation to giving consent to the assignment of the existing Franchise Agreement and sale of the Franchised Business;
  • review and advise you about the terms and conditions to any Contract of Business Sale between an outgoing Franchisee (Seller) and incoming Franchisee (Buyer);
  • ensuring the business conveyance process (from the Franchisor's perspective) proceeds correctly so that you are protected;
  • etc

As commercial lawyers, Greyson Legal can assist you with general commercial law matters relevant to you as a Franchisor and the franchise system as they arise.

Sale of an existing Franchise Network

In the event the franchise system itself is to be sold, Greyson Legal's Franchise lawyers can advise and assist with the sale process.

Why Franchise My Business ?

If you an existing Business owner or entrepreneur, franchising is a model that offers a mechanism by which business growth can be achieved and as a way to promote your goods and services to a broader market than you could achieve on your own.

If you considering or having already determined to enter the franchise industry, developing a franchise system and launching a franchise network can be an exciting and anxious time.

Franchising is not for everyone and an assessment should be made early on as to whether the your Business format is suitable to be franchised.

As with any business, there are risks, so appropriate due diligence needs to be carried out before venturing into a franchise system setup.

Some of the reasons why franchising has become a popular vehicle for Business growth include (among others):

  • provides a way to achieve growth without giving up control or ownership
  • allows for the Business concept to be operated in multiple outlets or territories across various locations
  • minimises the need to expend capital by:
    • avoiding the requirement for the Franchisor to purchase the real estate or enter into leases to operate the business across multiple locations;
    • placing the monetary burden of any premises fitout on the Franchisee;
    • requiring the Franchisee to cover the costs of any required plant & equipment and staffing costs.

Issues to Consider when Franchising a Business

When looking to set up a Franchise system there a range of matters to be addressed. Below is a summary of some aspects to think about when deciding to franchise your Business:

Business Plan

It often said that those contemplating going into business and who develop and follow a formal Business Plan generally have a higher degree of success compared to those who do not develop a Business Plan. It is more important for prospective franchisors to have a Business Plan because of the additional factors involved in setting up and managing a franchise network.

Going through the process of preparing a Business Plan, especially at start up, will also assist in ascertaining whether adopting a franchise model for business growth is feasible.

The content and structure of a Franchisor Business Plan will vary depending on the nature of the franchise model but may address an array of topics including, among others:

A Business Plan is a living document and a management tool.  Reviewing the progress of the franchise model against the Business Plan on a regular basis is a good way to measure actual performance, and will provide relevant information upon which the business decisions can be made, such as:

  • Business structuring
  • Finance
  • Vision & Mission
  • Culture
  • Benchmarking
  • SWOT analysis
  • Your target markets
  • Competitor analysis
  • Goals/Objectives
  • Timelines
  • Types of products & services being offered
  • Marketing strategies
  • Pricing strategy
  • Costs (both at set-up and ongoing)
  • Revenue and profit forecasts
  • Supply chain determination
  • Plant & equipment required
  • Inventory needed
  • Franchisee selection criteria
  • Type of franchised outlet - fixed or mobile
  • Premises leasing (if fixed outlet location)
  • Franchise territory analysis 
  • Information Technology requirements 
  • Communication requirements
  • Intellectual Property
  • Insurance
  • Legals
  • Other issues (as applicable)

Pilot Outlet

Establishing a franchise model is typically associated with replicating the business across different locations. McDonalds Restaurants are a prime example: - the look, layout, type of food and pricing of the products in one store are identical to or very similar to that in another store in a different location.

For such replication to be successful, a Franchisor must develop operational processes, products, communications systems, pricing structures, etc which can be repeated over and over.

One method of due diligence to check if the franchise system can be replicated across multiple sites is to launch a pilot franchised outlet before committing to a larger scale roll-out.

A pilot franchise offers the Franchisor the ability to:

  • work through any issues that arise with the operation of the pilot store
  • address any gaps in systems and processes
  • adjust training techniques
  • make alterations to Operations and Procedures Manuals
  • etc.

Rather than the Franchisor operating the pilot store themselves, the pilot store is operated by a franchisee - it is important therefore to ensure the right person is selected. If you appoint a franchisee with the wrong mindset or skillset and the pilot store fails, it may be difficult to determine if the failure arose due to the actions of the franchisee or as a result of franchise model itself.

If you are contemplating establishing a franchise model then you may wish to consider whether a pilot franchise outletshould be set up first to verify if the franchise model is a viable strategy for your Business growth.

Intellectual Property

Intellectual Property forms an important element of franchising. This is because the Franchisor (or an associated entity, sometimes called a "Licensor") will own:

  • one or more registered trademarks
  • copyrighted material
  • trade secrets or know-how; and
  • confidential information,

which is then licensed to Franchisees as part of a franchise system. 

When setting up a Franchise System it is critical that the Franchisor's intellectual property rights are identified and appropriately protected.

Learn more about Franchising and intellectual property.   

Franchise Management Systems

As a prospective Franchisor you need to consider and put in place appropriate franchise managements systems. That is, ways to help manage individual franchises and the franchise system. This may entail methods to:

  • capture franchisee information
  • gather and collate relevant data
  • assess financial figures, such as - measuring budgets versus actual performance
  • generate applicable reports
  • track franchisee communications 
  • capture customer information
  • manage and coordinate franchisee training
  • manage your franchisee territories - such as, allocation of jobs from head office based on territory ownership
  • ensure key dates are not missed, for example, term renewal date notifications required under the Franchising Code of Conduct
  • automating billing processes
  • calculate royalties based on revenue
  • etc

With an effective franchise management system in place Franchisors are better able to:

  • assess the overall state of the franchise business model
  • track franchisee performance and compliance
  • achieve pre-set goals.

When putting in place any franchise management system it will be necessary to also include:

  • an assessment of your current information technology (IT)
  • determining whether those IT systems need to be updated or replaced
  • an analysis of other franchising IT systems (such as cloud based franchise systems) to see whether they fit with your franchise model.

Finances and Capital

Assessthe financing required and ensure that the Franchisor entity is adequately capitalised 

Franchising Code of Conduct

The Franchising Code of Conduct “the Code” is a mandatory industry code that applies pursuant to section 51AD of the the Competition and Consumer Act 2010.

Compliance with the Code is administered by the Australian Competition and Consumer Commission (ACCC).

There are a number of obligations set out in the Code that apply to Franchisors. For example, a Franchisor must create and maintain a Disclosure Document in the form and layout prescribed by the Code. 

When setting up a Franchise System it is important to ensure that you comply with the Code - a failure to comply can lead to fines, penalties and potentially affect the validity of a Franchise Agreement entered into with franchisees. 

Term and Renewal Terms of the Franchise Agreement 

Franchise Agreements are almost always for a fixed term. The length of the term will vary depending on the type of franchise. Mobile franchise systems generally are for lesser periods than franchises involving a physical premises - if only because the costs to fitout the physical premises in accordance with the Franchisor's layout and branding will be higher than in regards to a mobile franchise system.

The term of a Franchise Agreement could be anywhere from 3 years to as long as 20 years. In most cases they tend to be around the 3 year to 5 year period.

When a Franchisee enters into a Franchise Agreement they are being granted a "licence" to use the Franchisor's systems, processes, know-how, intellectual property and to be given support and training, etc.

At the end of the term (or licence period) the Franchisee may be given the ability to renew the Franchise Agreement and licence for a further term (or renewal period).

The length of the term, the length of any further term and the conditions attached to those are outlined in the Franchise Agreement.

If there is a lease of a physical premises as well, then ideally the term and any further term should mirror the same period as in the premises lease and/or occupancy licence.

Usually the option to take up a renewal term will be at the Franchisee's election, but there will be pre-conditions to be satisfied before a further term is granted. 

When creating the Franchise System,thought needs to be given by the Franchisor as to the period of the term and any further term and the conditions attached.

Franchisee Recruitment

Not everyone is suited to being a franchisee. As a Franchisor, the franchisee recruitment selection process is an important element of the overall franchise model. Selecting the wrong people as franchisees not only can adversely impact upon:

  • the franchisee's emotional wellbeing; and
  • the financial viability of the franchisee's business,

but can also:

  • lead to poor morale for other franchisees in the franchise system
  • erode the brand's marketing power
  • affect the reputation of the Franchisor; and
  • impact on the franchise model as a whole.

 Franchisors need to have a well thought out and structured vetting process that makes sure prospective franchisees:

  • understand exactly what they're getting into
  • do not have unrealistic expectations about being part of a franchise model
  • have the right attitude and mind-set to be a franchisee
  • have the required skill-set to make their franchise successful
  • are the right "fit" for the franchise model based on their background and intentions

Fees

There are a variety of fees that may apply to a Franchise System. Which particular and the amount of the fees will vary depending on the franchise model involved. Typical fees may include:

  • initial franchise fee
  • continuing fees
  • marketing fees
  • training fees; and  
  • other revenue streams.

Royalties

Where royalties form part of the franchise model, invariably the royalties are calculated as a percentage of gross revenue (or turnover) of the Franchisee's business. With such a mechanism, as the Franchisee's turnover increases so to do the royalties payable to the Franchisor. When adopting a royalties mechanism, thought needs to be given as to how it is to be implemented so as not to be at a level that is unsustainable. There is little point having a royalty that cripples franchisees and is unachievable as this will only lead to franchisee discontent and threaten the entire franchise model.   

There are different royalty mechanisms. One option where royalties are attached to turnover is to implement a sliding scale, so the royalty percentage reduces as turnover increases. For example, 8% on turnover of $40,000 per month and 6% on turnover greater than $40,000 per month.

Whether a royalty is adopted and how it is adopted needs to be thought through and not just a matter of picking a number out of the air.     

Franchisee Support

As a Franchisor you need to consider what support you will provide your Franchisees and the manner in which the support is to be provided.

Invariably when franchisees are in the early stages of operating their franchised business, they will tend to require more assistance from the Franchisor, whether that is in relation to technical matters, sales, marketing or other operational support.

Franchisors should allow for this and tailor the level of support accordingly.

Businesses will fluctuate in respect of revenue and profits over time. Franchisors need to also think about different support strategies to deal with situations when economic times are tough or situations arise which negatively impact on franchisees. 

Misunderstanding about support is an area that can lead to dispute between a Franchisor and Franchisee, which can lead to mis-trust and contribute to Franchisee failure and disruption to the franchise system as a whole. So getting this right is important.

Territories

Territory selection has a direct impact on the viability of a franchised business and the Franchise System.

Identifying the Territory

Use of a geographic plan which shows territory area or use of postcodes are common ways to identify a territory. Although this may not necessarily be the best approach.

Too large a territory may result in the territory being under-serviced.

Too small a territory may cause the franchised business to become unviable.

Statistical data including demographics; market surveys; and consultants' experienced in this field should be utilised to assist with territory selection (as opposed to just selecting an area on say postcodes alone).

Exclusive or non-exclusive territories

Exclusive

Exclusivity implies the Franchisee being given total control of the territory to the exclusion of other franchisees and the Franchisor.

It can happen with newer franchise systems, however, that the first batch of franchisees are given territories that are just too large for them. This potentially causes issues because the Franchisee is either unwilling or unable to develop the customer base within that territory, perhaps because the Franchisee is satisfied with the customer base it has already achieved.

This can then impact on market penetration of the Franchisor’s brand, product or service. 

Franchisor’s maybe able to counter this by setting minimum performance criteria (eg. minimum sales quotes) or set minimum royalty amounts.

Non-Exclusive

As a general rule, the Franchisor has no restriction on granting other franchisees or itself an opportunity to operate a franchised business within a non-exclusive territory.

The difficulty with a non-exclusive territory is how to manage encroachment and cannibalisation within that particular territory.

Exclusivity may not in all circumstances eliminate encroachment either, especially if some franchisees within a system flout the provisions of their Franchise Agreements by seeking customers from within another franchisee’s territory. They may get away with this for a time until the Franchisor or affected Franchisee become aware of the encroachment.

Franchise Agreements do sometimes include provisions allowing the Franchisor to alter the territory, eg. to allow for population growth within the territory.

Generally there will be no restriction on other franchisees or the Franchisor operating within a non-exclusive territory.

Even where the territory is exclusive, there may still be provisions in the Franchise Agreement allowing other franchisees or the Franchisor to operate within the territory. Eg:

Where the Franchisee has breached the Franchise Agreement;

  • The Nominated Representative or Franchisee has become sick and unable to carry out its obligations;
  • The Franchisor is permitted to sell its products/services on line;
  • The Franchisee is not meeting certain performance criteria.

Can the Franchisor alter the size of the territory 

Franchise Agreements do sometimes include provisions allowing the Franchisor to alter the territory, eg. to allow for population growth within the territory. 

Introduction of other Franchisees or the Franchisor into the territory 
Generally, there will be no restriction on other franchisees or the Franchisor operating within a non-exclusive territory. 

Even where the territory is exclusive, there may still be provisions in the Franchise Agreement allowing other Franchisees or the Franchisor to operate within the territory. Eg: 

  • Where the Franchisee has breached the Franchise Agreement; 
  • The Nominated Representative or Franchisee has become sick and unable to carry out its obligations;
  • The Franchisor is permitted to sell its products/services on line; 
  • The Franchisee is not meeting certain performance criteria. 

Striking a Balance 
Whether an exclusive or non – exclusive territory strategy is the right one for a particular franchise system will depend on the specific circumstances of that brand. 

Ultimately, Franchisors should be seeking to achieve the highest possible market share and gross revenue, while balancing this against assisting individual franchisee units to achieve profitability at a level high enough to sustain their businesses and want to stay in the franchise system. 

Location of the Business

For the majority of businesses which do not have a substantial or total online presence, the physical location of the business remains an important element in the success of a business. A business which is poorly located will have a distinct disadvantage compared with its competitors.

Marketing Fund

In the franchising context, a Marketing Fund is essentially:

  • a centralised fund typically administered by the Franchisor;
  • under each franchisee's Franchise Agreement, the franchisee is required to contribute an amount to the fund;
  • the contribution amount could be fixed or based on a percentage of gross revenue;
  • the money in the fund is then used for marketing and advertising expenses associated with promoting the brand on a broad scale basis and (sometimes) for local promotion of the franchised businesses. 

The Franchising Code of Conduct regulates how the Marketing Funds should operate.

Franchisors can choose whether to operate a Marketing Fund or not.

Where a decision is made to operate a Marketing Fund, then the Franchising Code of Conduct sets out certain rules, namely:-

  • a Franchisor must maintain a separate bank account for marketing fees and advertising fees contributed by franchisees
  • if the Franchisor operates corporate outlets, the Franchisor must pay marketing fees and advertising fees on behalf of each corporate outlet on the same basis as other franchisees 
  • the funds in the Marketing Fund must be used for legitimate marketing or advertising expenses
  • the Franchisor is required to prepare an annual financial statement detailing all of the Marketing Fund’s receipts and expenses for the previous financial year
  • this financial statement must be prepared within 4 months after the end of the last financial year; and 
  • the financial statement must be given to each Franchisee within 30 days of the statement being prepared. 

In addition, the financial statement must be audited by a registered company auditor within 4 months after the end of the financial year to which it relates. In terms of the auditing requirement, the Franchising Code of Conduct does allow the Franchisor the ability to avoid this auditing obligation if:

  • 75% of Franchisees in Australia, who contribute to the Marketing Fund, have voted to agree that the Franchisor does not have to comply; and
  • these 75% of Franchisees agree to this within 3 months after the end of the financial year.

For prospective Franchisors looking to create a franchise model, they need to consider whether or not to adopt a Marketing Fund, and if they do, ensure they are familiar with their operating and disclosure obligations as prescribed under the Franchising Code of Conduct.

Franchise Documentation

At Greyson legal we have extensive experience in:

  • the preparation of franchise documentation, such as: Franchise Agreements, Disclosure Document; and
  • drafting all necessary ancillary agreements, eg. personal guarantees, non-competition agreements, etc

Operations or Procedures Manual

Greyson Legal can assist you to prepare your Operations Manual(s).

Sales Data & Reporting

When setting up a franchise system it is important Franchisors have a way to collect sales data and other information from their franchisees.

Typically, the Franchise Agreement will include a number of provisions which set out a franchisee’s obligations around data recording and reporting.

The information collected can assist the Franchisor with such things as:

  • setting and reviewing key performance indicators (KPIs), for example, the Franchisee maybe required to reach certain minimum sales targets;
  • calculating marketing levy in the form of a percentage (%) of gross of net sales turnover during a specified period;
  • calculating royalty payments based on a percentage (%) of gross of net sales turnover during a specified period;
  • sales forecasting and determining the amount of revenue that will be generated during different periods. This information can be used to formulate specific marketing strategies for different times of the year.

Franchisee Illness, Incapacity and Death

It is important to also consider what happens if a Franchisee or their Nominated Representative:

  • suffers a more serious illness which prevents them from operating the Franchised Business for an extended period; or
  • suffers a permanently incapacitating injury; or
  • dies.

Where the Franchisee operates through a company a director will usually be appointed as Nominated Representative under the terms of the Franchise Agreement - being the individual directly in charge of managing the day-to-day operations of the Franchised Business.

And, where the Franchisee is an individual, the Franchisee and Nominated Representative are usually one and the same person.

If the Franchisee is a company with a sole director or the Franchisee is an individual, any serious illness, incapacity or death of that person will have a dramatic effect on the Franchised Business.

Mechanisms can be put in place by Franchisees to mitigate risk and to help manage the situation, such as, appropriate insurance and powers of attorney. 

When setting up the franchise system thought needs to be given as to how the Franchisor will address this scenario (should it arise) and how the terms of the Franchise Agreement should be drafted to provide appropriate processes where such an event occurs. For example, entitling the Franchisor to manage the Franchised Business until the Franchisee or Nominated Representative regains their health.

Training

Another aspect prospective Franchisors need to address is training of their Franchisees. 

Training is typically broken up into:

  • initial training; and
  • ongoing training.

The training program used by Franchisors to educate Franchisees should ideally involve a combination of one or more of the following:

  • hands-on training
  • specific direction within a Training Manual
  • formal lectures in a classroom style
  • videos
  • webinars
  • Franchisor assistance at the Franchisee's location
  • attending at another Franchisee's location to see how things are done
  • regular national franchise conventions/conferences

Prospective Franchisors need to consider the costs of franchisor-provided-training and how those costs are to be recovered from Franchisees. For example, will the initial training costs be incorporated as part of the Franchise Fee.

Franchisor-provided-training is really only part of the picture. Franchisees should also be encouraged to undertake appropriate further training or courses of eduction to build their knowledge and skill-set. 

Pricing of Goods and Services sold by Franchisees

As part of setting up a franchise system, thought needs to be given to whether and how you (as Franchisor) will control the pricing in respect of what your Franchisees can charge for goods and services sold through the Franchised Business.

Issues of control around pricing need to also take into account any statutory restrictions, such as those under the Competition and Consumer Act 2010 (Cth).

Franchisee Advisory Council

Franchise Advisory Councils (FAC's) are a representative committee elected to act on behalf of all Franchisees within a franchise system. You could think of them as a like a union.

The FAC in effect acts as a central mouthpiece for Franchisees designed to provide feedback to the Franchisor, to contribute ideas, and provide information to the Franchisor with a view to improving the franchise system and brand as a whole.

FAC’s can have varying levels of formality or informality.

The FAC typically would meet with the franchisor quarterly or bi-annually. The committee members in effect act in an advisory or consultative manner with the Franchisor.

For an FAC to be successful it would need to be formed on the mutual understanding that the Franchisor will take on board the information or recommendations made by the FAC when the Franchisor is determining its strategies for the franchise system. 

Premises Leasing

Premises leasing issues would only be applicable where a franchise system involves use of fixed premises, such as, a shop front.

Franchisors may either:

  • own real property freehold themselves (or through an associated entity) and then lease premises to the Franchisee; or
  • enter into a head lease with a 3rd party Landlord, subject to conditions allowing the Franchisor to offer a sub-lease or licence to occupy to their Franchisees; or
  • require Franchisees to enter into a lease direct with the Landlord.

There are advantages and disadvantages to take into account with each approach.

Depending on the type of franchise, various issues need to be considered in respect of the leased premises, such as:

  • rent
  • outgoings
  • bond
  • term of lease and renewal terms
  • building size
  • access to parking
  • ceiling heights
  • layout
  • fitout
  • security
  • etc

We can assist you by:

  • highlighting the different pros and cons of each approach
  • providing lease advice relevant to the circumstances
  • assisting with compliance with the Retail Shop Leases Act 1994 (Qld) (where applicable)
  • reviewing and/or preparing:
    • leases
    • occupancy licenses
    • fitout agreements
    • seating licenses
    • lease "step-in clauses"
    • etc

End of Term Arrangements

Consideration needs to be given to what happens where a Franchise Agreement expires or terminates. This will involve issues such as:

  • any rights granted to the Franchisee to renew the Term for a further period once the earlier Term of the Franchise Agreement comes to an end
  • the process to apply in respect of a renewal
  • whether the Franchisor will require the Franchisee to enter into a new Franchise Agreement
  • if any exit payment is payable to the Franchisee
  • what is to happen to unsold stock
  • how marketing material is to be dealt with
  • what happens to the plant & equipment at the end of the Term
  • what happens to any premises fitout at the end of the Term
  • will the Franchisee be entitled to sell the franchised business at the end of the Term
  • whether the Franchisor is granted any right of first refusal to acquire the franchised business from the Franchisee
  • is there a holding over period
  • etc

The Disclosure Document and Franchise Agreement need to appropriately deal with these and other relatedissues.

Dispute Resolution

Franchisor-Franchisee disputes do arise. We ensure you understand the dispute resolution process as prescribed by the Code.

Have a Franchising question ?

If you have any questions about using franchising:

  • as a way to develop your business concept; or
  • expand your existing business; or

you just require information more generally about franchising, we welcome your enquiry. Contact us today.

 

CALOUNDRA

By Appointment
P.O. Box 195,
Caloundra Qld 4551

REDCLIFFE

Shop 7, 120 Sutton Street
Redcliffe Qld 4020
P.O. Box 61,
Sandgate Qld 4017
T: (07) 3142 0463
M: 0411 248 885
E: info@greysonlegal.com.au
Member of Queensland Law Society