As a franchisor, you are granting someone a right to carry on a business using a system that you own or are entitled to license. The system will often include:
- intellectual property including trademarks, logos and confidential information;
- readily identifiable get up and presentation;
- know-how and business systems which are detailed in a written manual;
- various support mechanisms to assist the franchisee;
- an agreement detailing the obligations of the franchisee; and
- exclusive territory in which the franchisee can operate.
The franchising industry is regulated by the Competition and Consumer Act 2010 and the Franchising Code of Conduct which regulates the:
- requirement to provide franchisees with disclosure statements;
- provision of a cooling off period;
- contract terms; and
- dispute resolution mechanisms.
A properly drafted Franchise Agreement will be prepared after detailed discussions with you are undertaken to understand your business model, intellectual property and commercial agreements necessary for the operation of your franchise. Usual terms will include:
- the grant of rights to operate the business;
- the franchise term;
- business location and exclusive territory;
- franchise fees;
- establishment costs;
- training and development;
- rules and regulations;
- confidential operations manual;
- sale of the franchise business;
- default and termination provisions;
- restraints of trade upon termination or sale;
- advertising and marketing funds; and
- security documents to ensure payments and compliance with undertakings.
This list is not exhaustive and you should consult a properly qualified legal professional to assist you with any queries you may have regarding franchising.