This part is a bit more daunting than the six preceding components of our series – the basics, the people, the vision, the finances, and the the operating systems – because the preparation of legal documents and agreements is a highly specialised area. However, since they stitch together the hard work you͛ve thus far, a closer look into them is absolutely necessary.

two businessmen shaking hands

Franchise Agreements

No matter where you are in the world, it͛s integral that you have some form of legal document, such as a Franchise Agreement, in place between you and your franchisee. A Franchise Agreement will protect each party͛s interests, spare you both from wasting time and money with unnecessary disputes, as well as form the foundation upon which your our relationship is built.

The agreement should include topics such as:

  • Brand protection rules,
  • Fee structures,
  • Timescales,
  • Renewal or termination,
  • Territory rights,
  • And much more – pretty much anything that͛s deemed important to the franchise business.

Because it is a legal document, there are likely very stringent provisions on how the agreement is put together, so it͛s important to know what those things are.

Be aware of regulations As a franchisor, you have more responsibilities than just an ordinary business owner because, not only are you running your own business (the franchise), but you are guiding others on how to operate theirs (the franchisees). This means there will be a minimum level of business conduct you will need to abide by, as well as a certain level of information you must disclose to your franchisee before you proceed.

As such, most governments will have overarching regulations to ensure both parties are protected, so make sure to look into who that is in your country. In Australia, that governing body is the Australian Competition and Consumer Commission (ACCC).

The Franchise Code

The ACCC regulates both franchisors and franchisees under something called The Franchising Code. While this code isn’t your actual franchise agreement, it is a helpful disclosure document that informs both parties of what they͛re getting themselves into before entering into an agreement.

two hands sigining documents

This is such an important part of franchising that the ACCC has even produced a Franchisor Compliance Manual In order to ensure franchisors are compliant with The Franchise Code.

This is easier than it looks

Making your legal documents and agreements comprehensive and compliant now will save you a lot of time later. Whether you͛re well into your franchising journey or just at the beginning – remember, it needs to be done, and right.

Sure, it can be overwhelming at first glance, but as long as you have a franchise-savvy lawyer on your team, this entire step is much easier than it seems. Also, good franchise lawyer will always ensure your documents stay up to date as governing rules change.

So if you͛re unsure about the ͚fine print͛– you can either wait for our next and final blog post for this 7-part series, or contact one of our friendly consultants today on 1300 960 136.

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