Franchising

21 April 2010

Franchising is the largest growth area for small business. Meerkin & Apel is well equipped to provide comprehensive advice on franchising and related intellectual property, leasing and business structuring advice.

Properly securing your intellectual property (including confidential information and business know how) form the basis of developing brand recognition and accordingly franchise agreements. Franchise agreements must be drafted to protect your intellectual property rights so that others cannot replicate them.

All franchise agreements must also comply with the Franchise Code of Conduct. Sometimes business owners may be conducting a franchise without even knowing it. The Code provides that a franchise agreement is an agreement:

  1. that takes the form, in whole or part, of any of the following:
    1. a written agreement;
    2. an oral agreement;
    3. an implied agreement; and
  2. in which a person (the franchisor) grants to another person (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; and
  3. under which the operation of the business will be substantially or materially associated with a trade mark, advertising or a commercial symbol:
    1. owned, used or licensed by the franchisor or an associate of the franchisor; or
    2. specified by the franchisor or an associate or the franchisor; and
  4. under which, before starting business or continuing the business, the franchisee must pay or agree to pay to the franchisor or an associate of the franchisor an amount including, for example:
    1. an initial capital investment fee; or
    2. a payment for goods or services; or
    3. a fee based on a percentage of gross or net income whether or not called a royalty or franchise service fee; or
    4. a training fee or training school fee.

Determining whether or not your business is a franchise requires specialist advice and there are specific exclusions in the code as to what does not constitute a franchise. If you are considering entering into a franchise agreement and require advice please do not hesitate to contact us.