Many people wrongly believe that if an agreement is not put in writing they are not required to honour the agreement. This is incorrect (except for some exceptions, one of which is noted below). A verbal agreement may be enforced by either party to the agreement regardless of whether that agreement is in writing. So be careful what you agree!The difficulty you may have guessed is, proving what was agreed. Indeed we see many agreements, even written agreements that are very unclear. There is sometimes so little detail or, so little care taken, that it is difficult to know what the parties are intending.
|Taxable value||Rate of tax|
|$600,000–$999,999||$500 plus 1 cent for each $ more than $600,000|
|$1,000,000–$2,999,999||$4,500 plus 1.65 cents for each $ more than $1,000,000|
|$3,000,000–$4,999,999||$37,500 plus 1.25 cents for each $ more than $3,000,000|
|$5,000,000 and over||$62,500 plus 1.75 cents for each $ more than $5,000,000|
1. That the Franchisor is performing well; 2. That the Franchisee's existing business (if any) is performing well, within the franchise system.
These investigations are part of your due diligence. There is more to due diligence than having your lawyer check the contracts and your accountant check the figures. Obviously these things need to be done and it would be foolish to consider a purchase without these checks however, you, also have a role to pay.
Every Franchisor is obliged to keep a current disclosure document. That disclosure document is a very useful source of information for you. It should, if properly written tell you if the Franchisor has been terminating franchises and if franchises have been failing or disputes have been brewing. It will tell you the experience level of the Franchisor and much more. If you do not understand the disclosure document then you should get assistance. If the disclosure document is not well written this should be a warning to you.