Franchising Your Business (Franchisor)

Franchising offers many benefits, both for franchisors and franchisees. Franchising is a way to expand a business without incurring the costs of opening new locations. For franchisors, it is also a way to build brand awareness and loyalty.

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That being said, franchising is not without risk. The biggest risk is that franchisees will not be successful and will fail to meet their obligations under the franchise agreement. This can damage the franchisor's reputation and business such that it is important to ensure proper reporting requirements and safeguards are in place to avoid such a consequence.  

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Before you decide to establish a franchise system, get expert legal advice from a franchising lawyer who is an expert in franchise law who will guide you through all of the details of franchising and setting up water-tight franchising systems.

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• Business Plan: 

  • If you want to franchise a business, a business plan will help. A plan can assist in identifying who is the ideal franchisee, where they may operate, what sort of staffing and support they are likely to need, and how much it will cost to get your franchised business up and running.

• The Importance of Writing a Good Franchise Agreement: 

  • A good franchise lawyer is key in drafting good agreement compliant with franchise law that will contain key terms between the parties including the duration of the contract, renewal rights, obligations of the contracting parties, franchise fees, marketing contributions, insurance requirements, reporting requirements as well as other important clauses which may be industry specific (e.g. holding licences, qualifications and similar).

• Franchising Code of Conduct: 

  • The Franchising Code is a legal code that must be followed in order to stay compliant with the Competition and Consumer Ac, 2010. The code explains certain rights and obligations of parties to a franchise system and the minimum information that must be provided to franchisees. The franchisor responsible for creating and updating a compliant disclosure document at specific points in time. The Franchising Code also governs how disputes between a franchisor and a franchisee should be handled by the Franchise Mediation Adviser's Office (“OFMA").

• Franchising Tax Obligations: 

  • Franchisors should also be cognisant of tax obligations and the way franchise fees are taxed. All payments from a franchisee to the franchisor will be taxable income, and those payments will also incur GST payment. Franchisor payments to the franchisee generally include an initial franchise fee, subsequent franchise fees, service fees or royalties, advertising expenses, and transfer costs. Given the many implications that can arise out of a failure of meeting the franchise tax obligations, and to protect against possible franchise disputes and franchise legal actions, any franchise businesses should seek professional help, be that tax or legal advice from law firm.

• Attracting Franchisees: 

  • Potential franchisees can be found through a myriad of channels such as internet searches, franchise directories and advertisements, roadshows and more. We can introduce you to a team of professionals that can assist in identifying and marketing to the right franchisees and in create great marketing and content material.

• Management Team: 

  • Where possible, a franchisor should consider developing a management team charges with responsibilities for identifying and fielding potential franchisees, providing ongoing franchisee support, monitoring performance, reporting on performance, conducting credit and risk controls, and offering technical and marketing assistance to franchisees. BlackBay Franchise Lawyers has a team of employment lawyers that will be able to assist with developing a management team plan.

• Franchise Intellectual Property protection: 

  • Protection of intellectual property is of paramount importance. Franchisors should take steps to protect intellectual property in their own business and brand name, trademarks, business operations, franchise documentation such as manuals, operating procedures, as well as in unique and inventive business ideas including taking steps of taking out a trade mark. Our team of franchise lawyers will work with you to ensure that your franchise documentation properly identifies and protects intellectual property rights and explicitly regulars what and how any franchisees can do with it.

• Workplace Health & Safety: 

  • As experts in commercial law as well as employment law, we can provide legal services advise on workplace health and safety laws and requirements relevant to the franchise system and business and prepare operating manuals and manuals designed preserve the safety of everyone involved in the franchise.