franchised business Tag

Franchise disputes must be resolved in a particular way. Franchisors who are not prepared to be nice, should beware! There are good reasons why a franchisor should listen carefully to their franchisees and make genuine attempts to resolve any  franchise dispute.
A franchise agreement entered into on or after 1 October 1998 must provide for a complaint handling procedure that complies with Part 4 of the franchising code of conduct.
The Franchising Code also obliges both parties to act in good faith.  In order to decide if the parties have acted in good faith a court will look at whether the parties have acted honestly, and for genuine reasons and whether each party has cooperated to try to achieve the objective of the Franchise Agreement.

The Full Court of the Federal Court handed down a decision this year that has the potential to affect Business people who might not consider themselves involved in a franchise relationship. The decision also places in doubt the extent to which a Franchisor must go, when undertaking the process of issuing a disclosure document.  We believe that this process must be dictated by the particular circumstances of the

Riba Business Lawyers

Have you ever wondered whether licensing or franchising is the best model to grow your business?  Many people wanting to avoid the cost and regulation of franchising will consider licensing as an alternative. But is licensing your business model really an alternative to franchising? What is licensing anyway and what is the difference between a franchise and a licence?

Firstly you cannot convert a franchise to a licence simply by changing the name at the top of the document.  The label given to the arrangement has no influence over the legal effect of the arrangement.  Franchising is just a form of licensing.

Whether the relationship that you wish to establish is really a franchise or a licence can be determined only in one way.  The Franchising Code of Conduct defines certain arrangements as a franchise.  The code provides that if certain ingredients are present then a franchise exists.

It is quite common for Franchise Agreements to contain clauses which have a significant effect on the way in which the sale contract should be drafted.  If  a contract for the sale of a Franchised business is signed without first reading the Franchise Agreement and checking any requirements, then it may be difficult to unravel the resulting mess. There is a lengthy list of things that need to be checked.  If  steps are not taken to ensure compliance, then it is likely that any sale contract will be in conflict with the Franchise Agreement.  This problem can be difficult to resolve because the sale contract may oblige the seller to do one thing and the Franchise Agreement may prohibit the doing of that same thing.

There is no such thing as a standard Franchise Agreement.  However there are certain things that all Franchisors will try to control using their agreement.  This need for the Franchisor to maintain control gives all Franchise Agreements a common flavour. There is sometimes a misconception that the Franchise Agreement is designed to protect both Franchisor and Franchisee.   There is however little contained in a Franchise Agreement which is designed to protect a Franchisee and this is often a source of disappointment to the Franchisee once the documents are reviewed.  Franchisees do however enjoy significant protection given at common law, from legislation such as the Franchising Code.

We will ensure that legal fees are not one of the obstacles in the way of your franchise project.  Think of us as partners in the creation of your franchise system. Call and find out how you can franchise your business but delay much of the legal costs of the project.  Do you need a big law firm or a great lawyer with plenty of experience in franchising?  We have been helping business people franchise their businesses since the turn of the millennium.  Hear what some of our clients have to say.  If  you are looking for sophisticated yet down to earth lawyers who are approachable and easy to understand, we would value the chance to help you make your franchise a success.

Section 51 AE of the Competition and Consumer Act (previously the Trade Practices Act) provides for industry codes such as the Franchising Code.

A breach of the Code constitutes a breach of the Competition and Consumer Act. Section 51 AD of the Competition and Consumer Act provides that "a corporation must not, in trade or commerce, contravene an applicable industry code" In a case known as Ketchell's case the court was asked to look at the consequences of a failure to breach the code. The facts of the case put simply are that the franchisor brought an action to recover money that the franchisee said was owning under the franchise agreement.

The cost of preparing legal documentation to turn a business into a franchised system is between $8000 and $20,000 plus GST .  This cost may be recovered by the sale of  franchises. Once the template documents are prepared the franchisee should pay the franchisor's costs to prepare and issue the documents, as well as the cost of negotiations. We set up franchise systems for clients throughout Australia. Please contact us for an instant quote.  The task of preparing this documentation is a routine legal engagement for us however it is a lengthy process where each step in the process must be respected. We can usually provide draft franchise documentation within 2 weeks of receiving instructions.

The cost and time involved is determined by the complexity of  the system, and the extent to which the client has resolved issues relating to the workings of the system.  For example if the franchise system relates to a home or vehicle based system, then the cost is generally not much more than $8000 plus GST. When it is necessary to incorporate procedures relating to retail shop leasing then this would normally add another level of  processes and cause cost increases.

The Australian Competition and Consumer Commission has instituted proceedings against Sensaslim Australia Pty Ltd (Administrator Appointed) (Sensaslim), Mr Peter Clarence Foster, Mr Peter Leslie O’Brien, Mr Adam Troy Adams and Mr Michael Anthony Boyle.

The ACCC alleges that Sensaslim and several of its officers engaged in misleading and deceptive conduct and made false representations in relation to the identity of Sensaslim officers, the Sensaslim Spray and the business opportunities offered by Sensaslim.

The alleged conduct includes:

· Failing to disclose the involvement of Peter Foster in the business of Sensaslim;

· Falsely representing that the Sensaslim Spray was the subject of a large worldwide clinical trial when in fact no such trial was conducted;

· Falsely representing that Dr Capehorn, an obesity specialist, gave unqualified support to the effectiveness of the Sensaslim Spray and the purported clinical trials; 

The Federal Court has penalised Allphones Retail Pty Ltd $45,000 for contempt of orders following action by the Australian Competition and Consumer Commission.

Justice Nicholas found that the conduct was both ‘serious’ and ‘deliberate’, having been undertaken by a number of Allphones’ senior personnel.

The orders which Allphones has been found to have breached concerned two undertakings given by Allphones to the court in October 2008.

They prohibited the company from withholding consent to the assignment of an Allphones franchise if the franchisee would not sign a deed releasing Allphones from liability and required Allphones to give the ACCC 7 days’ written notice of its intention to withhold consent to the assignment of an Allphones franchise on the basis that the new franchisee must enter into a new franchise agreement.

“This decision sends a clear message that the ACCC and the Court regard breaches of court orders very seriously,” ACCC Chairman Graeme Samuel said today.