In addition to the standard business laws, regulations and requirements, franchisors and franchisees also need to ensure they comply with the new Franchising Code of Conduct which came into full force and effect on 1 January 2015.
The Franchising Code of Conduct is a mandatory industry code that has the force of law under the Competition & Consumer Act 2010. The aim of the code is to regulate the conduct of participants in franchising towards each other and to ensure that they are sufficiently informed about a franchise before entering into it. The code also provides a cost-effective dispute resolution scheme for franchisees and franchisors.
What is a Franchise Agreement?
A Franchise Agreement is an agreement (written, verbal or implied) between a franchisor and franchisee with the following characteristics:
- the franchisor grants the franchisee the right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan substantially determined, controlled or suggested by the franchisor or an associate of the franchisor;
- the operation of the business will be substantially or materially associated with a trademark, advertising or commercial symbol that is owned, used, licensed or specified by the franchisor; and
- the franchisee is required to pay, or agree to pay, a fee before starting or continuing the business.
Our team at Shire Legal can assist you in understanding your rights and obligations under the Franchising Code and Agreement.
Shire Legal can also assist with the business purchase – if you are buying an existing franchise from an existing franchisee, we can assist you with the franchise documentation from the franchisor, as well as assist you with the business purchase and any lease transfer.
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