Franchising in Australia is regulated by the Franchising Code of Conduct. This code is a mandatory industry code that regulates the conduct of franchisors and franchisees. The Code includes disclosure requirements, good faith obligations, dispute resolution mechanisms, cooling-off periods and procedures for ending a franchise agreement. Our experienced solicitors at Butlers Business Lawyer’s can advise franchisors and franchisees on their rights and obligations pursuant to the Code.
Buying or selling a franchise
Purchasers of a new or existing franchise will be required to enter into a franchising agreement with the franchisor. It is imperative that prospective franchisees seek independent legal advice before entering into a franchise agreement. Franchisees wishing to sell their business will need to ensure that they abide by contractual restrictions in the franchise agreement.
On the one hand the purchaser of a franchised business is buying a business with an established brand and ‘system’. However, the franchisee’s operation of the business is governed by a franchise agreement which could subject them to significant costs.
In addition to the franchise agreement, the franchisor is also required to provide a potential franchisee with a copy of the disclosure document. The disclosure document contains information about the franchise business, and is designed to ensure that the franchisee makes a reasonably informed decision about whether to purchase the franchise. It is important that before entering the franchise agreement that prospective franchisees seek legal advice to understand the disclosure documentation, franchise agreement and the potential risk and benefits of purchasing the franchise.
Our solicitors provide expert legal advice and assistance for franchisees. We can help streamline the sale process, and negotiate on behalf of our clients.