Franchise Agreements Australia
Franchise Agreement Templates
Australia is the most franchised country in the world. The growth in franchised businesses in Australia has been enormous. This is where Franchise Agreements become important to your business model.
Franchising Agreements are an essential requirement for the expansion of the scale of a business in Australia.
Franchising is heavily regulated in Australia. This contains both positive and negative aspects. The positive side there are many avenues for franchisees to seek compensation and redress in the event that things go awry. The negative there is a large amount of legal red tape. A Franchising Agreement is a very important part of your business.
There are many different types of Franchise Agreements available and is important to get one that is right for your business.
What is Franchising?
Franchising is a model for doing business. When you enter a franchise agreement, the franchisor controls the name, brand and business system you use. The franchisor grants you the right to operate a business in line with its system, usually for a set period of time. There is no guarantee you will be able to keep your franchise business after the initial period of the agreement ends.
Franchisors and franchisees must comply with the Franchising Code of Conduct, which exists under the Competition and Consumer Act 2010 , as well as consumer and company laws. A franchise agreement, once entered into, is a legally binding contract.
A franchise can offer particular benefits over other types of businesses. Franchises have an established product or service and an existing reputation and image. You also have access to the franchisors experience and knowledge in the industry, planning, marketing skills and operating procedures. Some franchise systems provide support, some do not. Think about whether the franchise system you are considering suits your business experience, skills and needs. Statistics
suggest franchises have a lower failure rate than other businesses.
This article is not a complete guide to franchising. It should be combined with your own independent
legal, accounting or business advice and information provided by the franchisor.
Franchise Agreement Template
Franchise Agreement + Schedule
This Franchise Agreement Template covers matters required by the Franchising Agreement Code including:
- Interpretation & Definitions
- Cooling off period
- Franchisee’s initial obligations
- The Code
- Designated representative
- Training fee
- Initial capital investment fee
- Ongoing franchise fee
- Duties of the Franchisor
- Duties of the franchisee
- Customer referral
- Accounts and Financial Records
- Advertising and marketing
- Business name
- Sale by franchisor
- Sale by franchisee
- Preconditions to consent to sale
- Consequences of termination
- Restraint of trade
- Dispute resolution
- Independent contractors
19 pages long.
Master Franchise Agreement
Franchise Agreement Template
Master franchise Agreement is popular with service franchises. Service franchises are those which involve the franchisee selling services rather than goods. Service franchises are common in the home services, cleaning and courier industries. Often there will be no retail premises involved, with the franchisee operating from home. The use of a vehicle will be a critical element of the franchise.
A feature of service franchises is the high number of individual franchisees. To avoid creating a large head office bureaucracy master franchising can be used to delegate the responsibility of growing, developing and monitoring the network in a territory to a master franchisee.
The grant of a master franchise is very similar to the grant of a franchise. However, the terms of the master franchise and the responsibilities of the master franchisee are different from those of a franchisee. A franchisor must provide a master franchisee with a disclosure document, a cooling off period and other arrangements applicable to franchisees under the Code.
Franchise Agreement Disclosure Statement
On 1 January 2015 the Franchising Code was repealed and replaced with the Disclosure Document New Code. References to the Franchising Code of Conduct in the legislation are now references to the New Code.
The changes made in the New Code Disclosure Document include provisions that make changes to:
- the common law obligation to act in good faith;
- marketing funds be kept separate
- marketing funds only be used for purposes disclosed .
- franchisors required to contribute to marketing funds;
- That limits significant capital expenditure ;
- and limits end of term restraint of trade covenants ;
- limits nominating a jurisdiction for dispute resolution ;
- a new ‘information statement’ in addition to the disclosure document;
- expands the information to be given in a disclosure document
- expands the circumstances in which penalties may be imposed on franchisors for breaches of the code.
18 pages long.