Article Category - 13 March 2019

In last week’s article I discussed the findings from a recent inquiry into the operation and effectiveness of the Franchising Code of Conduct, with the key complaints from franchisees being the power imbalance that exists between a franchisee and franchisor.

There are some incredible advantages in setting up a franchised business including:

  • An established and generally proven business model;
  • Education and training by the franchisor in how to run the business;
  • Reputation and brand recognition in the market; and
  • Franchises have a higher rate of success than most start up businesses.

With the allure of the above, the ACCC noted a very alarming concern that a growing number of franchisees have been opting out of seeking legal and financial advice before entering into a franchise agreement. This poses a great risk to you as a franchisee, especially if any disputes were to arise relating to the terms of your agreement. This highlights for me the importance of a clear understanding and transparency between the franchisor and franchisee and the notion of “buyer beware”. Always do your due diligence before entering into any legal relationship.

If you think a franchised business model is right for you, here are our top tips to get you started:

  1. Jump on and check out different franchise options on the Franchise Business Directory;
  2. Once you find a business you are interested in, do your research. How long has the business been around? What are the online reviews like (remembering their brand and performance may impact your franchises reputation);
  3. Get a copy of the contract/agreement as soon as possible and bring it into Kenny Spring for our Business Law team to review; and
  4. Always get financial advice.

The best business decisions are made when you have a full understanding of all the risks, your obligations and what you can expect from the franchisor in the business relationship.

If you want peace of mind that all is in order, call our friendly team on 1800 650 656 and we’ll have a conversation with you about your business needs. We’re here to help!

Michael McGill | Solicitor