One of the most valuable assets of any successful business is its systems, processes and procedures. Perhaps equally important is the ability to generate a customer base and a good reputation for the business. The concept of franchising is essentially based upon these very principals.

If You Are a Franchisee

It is important to understand your legal rights and obligations under your franchise agreement and under the Franchising Code of Conduct. In nearly all cases the franchise agreement is drafted by the franchisor and therefore it is usually on terms beneficial to the franchisor, not the franchisee.

It is crucial that you obtain advice and negotiate the terms of your franchise agreement before you sign any agreement or binding document as it will often be too late to negotiate the terms of the agreement after the event.

Before entering into a franchise agreement, you should consider the following:

  • The different types of fees payable to the franchisor (or to a third party), when they are payable and the amounts that will be payable;
  • The true cost of entering into the franchise agreement;
  • Additional costs that will be incurred to establish the business (for example costs associated with a
  • Lease);
  • The term of the agreement and whether any options of renewal are provided;
  • Your personal exposure to liability;
  • The proposed franchise area;
  • The risk associated with the transaction and the limitations of buying a franchise;
  • Your rights and obligations under the franchise agreement;
  • Other matters that are set out in the franchisor’s Disclosure Statement.

If You Are a Franchisor

As a franchisor you need to ensure that your franchise agreement is drafted to protect you and your intellectual property.

It is important you understand and address potential risks and liabilities that are associated with franchising out businesses. It is also important that you understand and comply with your obligations under the franchise agreement and under the Franchising Code of Conduct.

Before granting a franchise agreement, you should consider the following:

  • The risk associated with the transaction;
  • The legislative requirements imposed on you when offering a franchise;
  • The financial viability of the proposed franchisee and whether a guarantee will be required;
  • What fees will be payable to you and when;
  • What intellectual property rights will be granted and retained;
  • The inclusion of restraint of trade and confidentiality provision;
  • Your rights and obligations under the franchise agreement;
  • Limiting your risks and liabilities.

How We Can Help

Stephen Woodward, being a former member of the Inaugural Franchise Advisory Committee for the Queensland Law Society, has considerable experience and understanding of franchises from both the franchisor and franchisee’s perspective. Stephen Woodward and his staff can assist by:

  • Helping you understand your rights and obligations under franchise agreements and legislation;
  • Identifying and managing legal pitfalls and issues;
  • Drafting or negotiating a franchise agreement that suits you.

We can also assist in other franchising issues such as:

  • Franchise disputes;
  • Terminating franchise agreements;
  • Assigning franchise agreements.

For further information please contact: