Franchising
Franchising is one business model that is available to people who wish to start a business chain and for those who wish to participate in opening a franchise. If you have questions about starting a franchise, or you have entered into a franchise agreement and would like to be aware of the legal implications of owning a franchise, Morgan Mac Lawyers are highly experienced Franchise Lawyers.
Franchise Lawyers Brisbane
Franchising law is a specialist area of law and franchisors and franchisees should seek advice from franchising lawyers who practice extensively in this area. If you are looking for a franchise lawyer in Brisbane who specialises in franchising, then Morgan Mac Lawyers can assist you in all areas of franchising law.
Franchise Law Q & A
A franchise is not a legal entity or a legal system, but it involves legal rights. A franchise is a means of doing business and a type of business relationship. The business relationship is between a franchisor and a franchisee, in which the franchisor grants a bundle of rights into the franchisee. These rights include the right of the franchisee to use the franchisor’s business model or to be a part of the franchisor’s franchise system and the right to use or benefit from the franchisor’s intellectual property. A franchise network includes several or numerous relationships between the franchisor and the franchisees. The franchisees are each given the same rights by the franchisor.
Franchising is a significant component of the Australian economy. Franchising covers many types of businesses in places all over Australia including Brisbane. The success or failure of a franchise business has little to do with the type of business or the franchise format and much to do with the quality of the franchise network and the conduct of the franchisor or the franchisee. Franchising lawyers with substantial experience in the practice of franchise law and knowledge of franchising can provide invaluable guidance to persons considering converting a business into a franchise format or becoming franchisees and buying a franchise.
A franchise will suit someone who does not wish to establish their own type of business and prefers to use a business format that already exists and has been tested, especially if the person wishes to become part of an established franchise network with a proven business model. The franchise format may be suitable to persons who are attracted to a business with a recognised brand and established presence in a particular industry.
You need to do your own due diligence. This is especially important. It means you need to make your own enquiries and obtain as much information as you can about any franchise in which you are interested. If you are looking for a franchise lawyer in Brisbane to give you commercially relevant advice as part of your due diligence, then Morgan Mac Lawyers can assist you.
For example, if you wish to operate a gym, you may investigate several alternative franchise networks that have a franchise format based on a gymnasium business and you will make enquiries and seek information from each of these alternatives. At some point, you will need to decide whether to purchase a franchise at a new site directly from the franchisor, or to buy an existing franchised business from another franchisee.
A franchise agreement has certain essential features identified in the definition of franchise agreement in the Franchising Code of Conduct. It is not always easy to distinguish franchise agreements from other types of agreements, such as licence agreements, that have some but not all the statutory requirements of a franchise agreement.
You need advice from a specialist franchise agreement lawyer on this issue if you are seeking to develop a structure that allows you to franchise or licence your business format to other parties. The consequences of not obtaining correct advice are serious. If you believe you are only licensing your business format to other parties to use it for a fee but is satisfies the test of a franchise agreement, then you may face serious penalties and legal claims if you did not comply with the Franchising Code of Conduct.
Although a franchise agreement is a contract, the statutory definition and consequences of getting incorrect advice show the need to obtain advice from a specialist franchise contract lawyer.
The benefits of a franchise is that the franchisee acquires a proven business system that has worked for the franchisor and other franchisees. As experienced Brisbane business contract lawyers, we understand that the franchisee may not need to create business systems and find suppliers and products or services as these have been sourced or developed by the franchisor. A franchise allows the franchisor to provide benefits to franchisees by operating on a larger scale in terms of broader marketing campaigns and purchase arrangements based on bulk buying power.
Starting any business involves risk. It is no different with a franchise business. However, there are some risks that are specific to franchisees, including restrictions placed on franchisees through contract terms such as preferred supplier terms, approved goods or approved supplier terms, restrictions on the franchisee’s rights to control their cashflow. There are also other risks to franchisees that are not part of the franchise agreement such as the franchisor trading in competition with its own franchisee.
We can assist by advising you of the risks of entering into a franchise agreement so that you make an informed decision to purchase a franchise.
Our priority at Morgan Mac Lawyers is providing franchise legal advice to clients who are seriously considering a franchised business purchase. As seasoned Brisbane commercial litigation lawyers, we stress that it is imperative for people entering into franchisee agreements to be aware of specific risks that should be taken into account before the agreement is signed and the client makes a significant financial and life changing investment.
If you are considering becoming a franchisee you are prepared to accept the risk of owning and operating your own business. You have also decided, or are considering, that the franchise model is suitable for you as a means of owning and operating a business. Speak to our experienced Franchise Lawyers before taking these steps.
It is critical that you obtain appropriate professional advice
The critical importance of obtaining appropriate professional advice is recognised in the Franchising Code of Conduct. It requires the franchisors to ensure that persons considering a franchised business purchase obtain legal advice or at least make a thoughtful decision not to obtain advice. Relevant and appropriate legal advice before buying a franchise may result in a well-informed decision and avoid future franchise disputes and franchise dispute resolution.
Buying a franchise usually commences a 5 or 6 year contractual relationship between the franchisee and the franchisor, and the franchise agreement you shall be asked to sign as a new franchisee shall impose many obligations on you. In our 20 years’ experience in franchising law we have reviewed many franchise agreements. In the last 6 years alone, Bill Morgan has reviewed over 60 franchise agreements. They all impose few obligations on franchisors but numerous obligations on franchisees. Our advice focuses on key obligations and what they mean, not just legally, but in commercial terms in the operation of a franchised business.
Over 24 years experience
Bill Morgan, one of our seasoned Franchise Lawyers, has acted in franchised disputes for over 24 years. We are aware of many franchise agreement terms that impose significant commercial risks on franchisees and the reasons why these terms lead to disputes and cause real business difficulties to franchisees. Our franchise legal advice brings these terms and their risks to your attention.
Thinking about buying a franchise? Speak to our Franchise Lawyers. Also you can download our Beginner’s Guide to Buying a Franchise below.
FREE DOWNLOAD
GUIDE CONTENTS:
- Outlines the benefits and risks of buying a franchise.
- Stresses the importance of seeking legal advice.
- Discusses preparation of necessary documentation
- Prelude to the “7 Must Do Checks for Franchise Agreements”
