Franchise Lawyers

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.

A franchise agreement grants another party the right to operate a business supplying or distributing goods or services under predetermined franchise systems by the franchisor. It draws upon the intellectual property and know-how of the franchisor to run (usually) under its brand. The agreement typically includes information about the agreement’s duration, the obligations of each party, payable fees, etc.

When starting a business, some important things you need to consider are the structure, legal documentation, and fees. Franchise relationships in Australia are regulated by the Code so we encourage getting advice from a franchise lawyer in Melbourne to ensure your and your franchise’s compliance from start to end.

Yes, a franchise can be considered a small business depending on its structure, consolidated revenue, the value of the consolidated gross assets, and the company and entities it controls.

According to the Australian Securities and Investments Commission (ASIC) and the Corporations Act 2001, a small business can be structured as a sole trade, company, joint venture, or partnership.

The Australian franchising sector offers lucrative opportunities, but profitability hinges on multiple elements. Key factors include selecting the right franchise brand, securing an optimal location (e.g., bustling shopping centres or high-traffic suburban areas), aligning with market trends (for instance, the growing demand for health-focused or tech-oriented businesses), and ensuring the franchise model’s long-term viability.

Equally crucial are the support systems provided by franchisors, which may include training programs, marketing assistance, and operational guidance. The franchisee’s own business skills, financial management abilities, and dedication to the venture play pivotal roles in achieving success.

Australia’s franchise landscape is robust and varied, encompassing sectors from fast food (eg. McDonald’s, KFC) to retail (eg. Harvey Norman, Bakers Delight) and services (eg. Mortgage Choice, Poolwerx). While many franchise partners report strong profits and growth, prospective franchisees should exercise due diligence. This includes thoroughly researching the franchise’s track record, consulting with existing franchisees, and seeking advice from franchise lawyers in Melbourne and accountants before signing any agreements with the Franchise Council of Australia-registered brands.