What is Franchising ?
Franchising is not a business itself, but a way of doing business. It is essentially a marketing concept involving an arrangement between a Franchisor and a Franchisee whereby the Franchisor’s knowledge, reputation, procedures, intellectual property and access to its good and /or service is licensed to a Franchisee.
The Franchisor also offers training, guidance, advice, assistance, and marketing strategies in relation to the franchised business.
In return, the Franchisee pays certain fees and royalties to the Franchisor and agrees to comply with certain obligations typically set out in a Franchise Agreement and Operations Manual.
Franchising in Australia is regulated through the Trade Practices (Industry Codes — Franchising) Regulations 1998, known as the Franchising Code of Conduct.
Growth of Franchising
Franchising is one of the fastest growing segments of the Australian market.
Griffith University undertook an extensive survey of franchising in Australia in 2014. Some of those statistics are:
- There are approximately 1160 business format franchisors in Australia in 2014, compared with 1180 in 2012.
- There are an estimated 79 000 units operating in business format franchises, reflecting an increase of 8.2 %.
- More than 460 000 people are employed directly in franchising.
- Sales turnover of the entire franchising sector was estimated at $144 billion.
Franchise legal documentation and Advice
Franchising is a specialty area of law. Whether you are a Franchisee or Franchisor it is important that accurate advice is obtained from lawyers familiar with this area of law.
That is where Greyson Legal comes in.
We have the expertise to draft and review franchising legal documents, we also can assist with dispute resolution and litigation.
We know the ins and outs of the Franchise Code of Conduct so you can be sure that we can give you sound advice about Code compliance.
We assist our Franchisor clients to develop franchise agreements that meet their business needs, and which also complies with the Franchising Code of Conduct.
Disclosure documentation is a regulatory pre-requisite of a franchise. Greyson Legal can prepare and update a disclosure document that complies with the Code.
Franchise Document Reviews
For entrepreneurs looking to purchase a franchised business, we can review and advise you on all franchise documentation to ensure that you are aware of your rights and obligations as a prospective Franchisee.
Infringements of the Franchise Code of Conduct can result in fines, penalties and potential termination rights, so it is important to get advice from lawyers familiar with the Code. Greyson Legal have this expertise.
An Operations or Procedures Manual is an important component of the franchised business. It is the blueprint which sets out the various processes and methods of undertaking the business. We can assist with the creation of or review of these documents.
Intellectual Property (IP)
A key component of franchising is the ability of the Franchisor to effectively licence its IP, e.g., trademarks and copyrighted material, to Franchisees in connection with the brand.
As part of a Franchisee's due diligence it it important to check the Franchisor's IP is in fact in place.
At Greyson Legal we can advise Franchisees about their IP obligations under a franchise agreement.
We can also conduct an IP audit and advise Franchisors about matters relevant to their IP including structuring and registering trademarks within Australia and internationally.
We can assist with preparing and/or reviewing licensing agreements, whether they be IP Licenses, Distribution Agreements, Supply Agreements or the like.
Whether you are an existing Franchisor looking to grow your business by establishing a Master Franchise in another country, or considering acting as a Master Franchisee in Australia for an international company, Greyson Legal can assist you with that process.
Ancillary franchise documentation
Apart from the franchise agreement and disclosure document, there are a range of ancillary legal documents that are needed in connection with a franchise system, for example, confidentiality deeds.
See of the ancillary documents are prescribed by the Code, such as a legal advice certificate or statement.
At Greyson Legal we can create or review and provide necessary advice regarding the full range of ancillary franchise documentation.
Depending on the nature of the franchise system, a premises lease maybe involved. The lease may in turn be either a commercial or retail lease.
In Queensland (as with other States and territories in Australia), retail leasing is regulated. In terms of retail franchises, it is important to be aware of these statutory requirements.
Apart from the franchise agreement, leasing can also impose restrictions on a franchised business. It is advisable to use lawyers experienced in leasing to advise you about your rights and obligations under the lease (or occupancy licence).
We can assist with reviewing, advising and negotiating commercial or retail leases.
Franchising involves a relationship between the Franchisor and Franchisee. Sometimes, this relationship breaks down and a dispute arises.
At Greyson Legal we have the skills necessary to assist you with dispute resolution, whether that be through assisting you to negotiate an agreed outcome, formal mediation, or in more serious disputes - litigation.
In most cases, the Principal has successfully assisted clients to either negotiate a settlement or mediate a dispute, thereby avoiding the costly exercise of litigation.
Where a negotiated or mediated outcome to a dispute cannot be achieved, we can advise and represent you in court proceedings. We have connections with a number of barristers whom are also able to provide appropriate counsel.
Franchisees we have represented
The Principal has advised and assisted clients to acquire, sell and manage franchised businesses linked to such leading brands as:
- McDonalds Restaurants
- Video Ezy Blockbuster
- The Coffee Club
- Gloria Jean's Coffees
- Ultra Tune
- Brumby’s Bakery
- Bakers Delight
- BB’s Café
- Pizza Hut
- Domino's Pizza
- Pizza Capers
- Eagle Boys
- Fastway Couriers
- Sumo Salad
- Donut King
- Cheesecake Shop
- Battery World
- Price Attack
- Jim’s Mowing
- Paul’s Home Delivery
- Clark Rubber
- Refund Home Loans
- Grill'd Restaurants
- Toscani's Restaurants
- Bucking Bull
- Outback Jacks
- New Zealand Ice Cream
- and many more.
Thinking of franchising as a way to grow your business ?
If you are an existing business owner and looking at ways to grow your business, then franchising may be a strategy worth considering.
Greyson Legal have extensive experience in franchise systems set up.
We represent a number of Franchisor clients with franchise outlets across Australia and Master Franchisees internationally.
There are a number of issues you need to consider if you are thinking of using franchising to grow your business. Here a few:
- do you already have an established business ?
- is it trading successfully ?
- is your business concept distinctive and proven ?
- can your business concept be replicated ?
If you answer "yes" to these initial questions, then franchising may well be a business growth strategy you can adopt.
The Principal has assisted and advised a number of clients to use franchising as a strategy to grow their businesses. These include:
- a protective coating business system with numerous franchise outlets in Australia;
- Master Franchisee in respect of the Australian license for a UK freight forwarding business system including the franchisees connected to this system;
- setting up a hair salon chain in Australia and New Zealand;
- in relation to the building industry;
- within the property marketing industry;
- in the pet foods industry;
- to sell products in the health food industry;
- an advertising and marketing enterprise;
- a Master Franchise in relation to the Australian license for a UK post cards business.