04 Sep What does it cost to Franchise your Business?
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.
Riba Business Lawyers aim to build an understanding of your concept and system at an early stage so that we can be of use to the franchisor throughout the life of the franchise system.
The standard documents that Riba Business Lawyers prepare are:
- The Franchise Agreement
- The Disclosure Document
- The Prior Representations Deed
- Deed of Covenant (restraints of trade)
- Licences relating to use of trade marks and names
- Powers of Attorney
- Guarantees and Indemnities
We also prepare the first letters, which introduce the franchisee to the documentation in the manner required by the code. We suggest that Riba Business Lawyers are employed to issue the first disclosure documents and Franchise Agreements so that we can ensure that the required certificates are obtained and that time frames are adhered to. It is of little use complying with time frames, if it is not possible to prove that the time frames have been respected. Dairies, telephone notes, and documentation must be kept meticulously.
The cost of the documentation can move toward the higher end of the range as the system becomes more complex. Complexity can be added for instance by:
- the need to impose restrictions upon franchisees in relation to products computer systems, or dealings with other entites.
- unusual requirements in relation to territories.
- unusual requirements in relation to the flow of funds through the franchise system
The costs of preparing franchise documentation is usually reduced if the client is able to provide a well written operations manual which makes clear the way in which the franchise system is intended to operate. The operations manual will usually set out more detail about operations than will the Franchise Agreement itself.
Please contact Riba Business Lawyers for a no obligation free quote. If you are in the early stages of considering franchising your business please contact us and we can set you on the right path. You may be eligible for a free thirty minute consultation.