Franchising, as a business model, has been rapidly growing in Australia. Franchising in Australia is regulated by Franchising Code of Conduct which consists of useful information such as compliance with the regulation and the code, licensing, and leasing.
This code requires that prior to entering into a franchise agreement the franchisor must receive from the franchisee a signed statement confirming that the franchisee has received independent advice from either a lawyer, accountant or business advisor. In addition to the Franchisor Code of Conduct, the franchisor is also required to provide the franchisee with an up to date and complying disclosure statement, and a draft of the proposed franchise agreement itself as required by the Competition and Consumer Act 2010.
The Franchise Agreement is the key legal document governing the franchise relationship between the franchisor and the franchisee. A well drafted Franchise Agreement by an experienced franchise lawyer will ensure that your rights are protected, and it limits your liabilities in a realistic way ensuring successful growth of your business.
Once you sign the Franchise Agreement the franchisor will provide the franchisee an operation manual. Depending on the type of the franchise business, the operation manual contains useful information regarding compliance with legal requirements of the operation of the business, the precise way in which record keeping must be maintained, suppliers of stocks, occupational health and safety issue, recruitment and selection techniques and the like. Essentially an operation manual is similar like a business plan.
Whether you are a franchisor or a franchisee, it is imperative that before you enter into a franchise agreement, you consult with an experienced Franchise Lawyer. It is not uncommon that in course of running a business, dispute between franchisor and franchisee arise. And in the event of such dispute legal documents such as franchise agreement, heads of agreement, operation manual, code of conduct, disclosure statement are increasingly being scrutinised to assess whether there was any misrepresentation or misleading or deceptive conduct by the franchisor or the franchisee.
If you require professional assistance in relation to your franchise matter, you could contact us on (02) 8379 1811 or info@kgrouplegal.com.au