A franchise is a sophisticated business model aligned with a distinctive brand or trademark. In this arrangement, the parent company (the franchisor) – such as McDonald’s, Subway, or 7-Eleven – grants an entrepreneur, corporation, or trust (the franchisee) the license to operate their own enterprise (the franchised business) under the franchisor’s established brand and operational system.
This might include using proprietary recipes, marketing strategies, and management techniques. In return for access to this proven business framework, the franchisee typically pays an initial franchise fee and ongoing royalties or fees throughout the contract duration.
In Australia, the franchise industry is regulated by the Franchising Code of Conduct (the Code), a mandatory set of rules enacted under the Competition and Consumer Act 2010. This comprehensive legislation, overseen by the Australian Competition and Consumer Commission (ACCC), governs all franchise operations within the country and provides crucial safeguards for franchisees.
These protections may cover areas such as disclosure requirements, cooling-off periods, and dispute resolution procedures. Any business arrangement that meets the Code’s definition of a franchise – which could include traditional retail franchises, mobile franchises, or even some distribution agreements – must adhere to all stipulations outlined in the Code. It is the franchisor’s responsibility to ensure full compliance with these franchise law & regulations, failure of which could result in significant penalties imposed by the ACCC.