Franchisees Acquiring or Renewing a Franchise

Entering into a Franchise Agreement is a big commitment for a prospective franchisee. Not only is there a sizeable amount of legally mandated paperwork provided by the franchisor to work through and sign, there are also various upfront and ongoing fees and charges, stringent restrictions on how the franchised business can be operated and the length of time the franchisee is entitled to operate the business.

Both the franchisor and franchisee are required to adhere to laws governing the franchising industry such as the Franchising Code of Conduct (Code) and the Australian Consumer Law (ACL).

Having a legal advisor experienced in the field of franchising is therefore essential for all franchisees, whether a prospective franchisee or the franchisee of an existing business. We can assist franchisees (and also master franchisees) as follows:

1. For new/prospective franchisees:
   • in consultation with the franchisee’s accountant, assisting the franchisee on determining the best structure for their business entity (whether it be a sole trader, partnership, company and/or trust). See our Business Structuring page for more details;
   • assisting with due diligence enquiries in the franchise system;
   • undertaking a comprehensive cover-to-cover review and providing advice on the franchisor’s Disclosure Document, Franchise Agreement and other ancillary documents;
   • assisting with and/or engaging in negotiations with the franchisor regarding any of our recommended changes to the Franchise Agreement to ensure that it is more fairly balanced and reflects the agreed commercial terms with the franchisor;
   • if the franchised business will be operated from a physical leased premises, reviewing and advising on the Lease, Sublease, Occupancy Licence, Step In Deed and/or ancillary documents, and assisting and/or engaging in negotiations regarding any of our recommended changes;
   • drafting Employment/Contractor Agreements for the franchisee’s staff.

2. Where relevant, undertaking the above steps for existing franchisees renewing their Franchise Agreement (and if applicable, premises Lease) for a further term.
3. Providing advice on:
   • day-to-day operational issues;
   • regulatory compliance and competition and consumer issues, including employment law advice;
   • exit strategies from the business.

4. Preparing, reviewing, advising on and negotiating commercial Agreements with suppliers.
5. Responding to breach notices received from franchisors and otherwise assisting with dispute resolution. See our Franchise Disputes page for more information.