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Franchising obligations

Franchising your business may appear to be a simple way to essentially “lease” your intellectual property and trade marks, to get your brand name further – but there are pitfalls and concerns!

28 June 2022

As a current or potential franchisor, you should carefully evaluate the landscape and be aware of the statutory protections which are provided to franchisees under the Franchising Code of Conduct. The Code sets out specific obligations of the parties to ensure that a minimum amount of accurate information is exchanged, and that some potential risks and issues are disclosed. 

From 15 April 2022, the penalties for breaching the Franchising Code of Conduct have increased significantly. 

The areas that you should be looking out for when discussing a franchise with a potential franchisee are:

  1. That you are acting in good faith;
  2. That you have complied with all of your disclosure obligations as a franchisor;
  3. That you have provided the appropriate disclosure document on the request of the franchisee;
  4. That you have provided notification as to the obligations of the other party including on termination of the franchise agreement;
  5. That you have complied with the requirements around termination and notice before termination;
  6. Compliance around the funds used for marketing purposes; and 
  7. Compliance with the requirements to attempt a resolution of a dispute through alternative dispute resolution procedures. 

It is important for you that you are aware of all your obligations as a franchisor and also that your franchise agreement best reflects your business, the Franchising Code of Conduct, and your expectations of the franchisee.

The team at Access Law Group can assist you with your franchising needs. 

At ALG, Tom Ellicott (Director) can bridge the gap for your business legal questions. 

If you are interested in speaking with Tom, please contact us for your initial Consultation addressing your business law needs on 02 4220 7100, by email lawyers@alg.com.au, or here.