What To Consider When Expanding Your Business Interstate

If your business wants to provide services to consumers in other states or support a larger distribution chain, expanding your business interstate may be a good option. However, there are several considerations you should be aware of before making this decision. This article explains how to expand your business interstate and breaks down the differences in state and territory laws that could affect your business.

Expansion Models

The first thing you will need to think about is how you want to expand. There are three key ways to expand:

1. employ more people and open new stores or outlets;
2. license third party contractors to expand the business. You can license them to sell products and/or provide services under your brand and according to your guidance; or
3. set up a franchise and grant new franchisees a franchise store, under your brand and according to your detailed operations manual.

However, for each option, there are a number of considerations to make. You will need to decide:

• where your head office will be located;
• how your interstate offices will interact with the national management team. For example, some businesses will have state warehouses which all report to a national head office. On the other hand, some businesses may allocate their business functions into different state offices;
• what personnel you will need in different states; and  
• why you need to expand interstate.

Where Do You Want Your Company to Be Registered?

Sometimes businesses change the state where their company is registered when they decide to expand interstate. The most common reason for doing this is because there are different tax regimes in each state.

However, if you want to change the state where your company is registered, you need to:

• gain shareholder approval. This means a shareholder meeting must vote on the changes in accordance with your company constitution. Usually, this requires a 75% majority;
• notify ASIC. Following the shareholder meeting, you will need to notify ASIC of the changes within 14 days. You must lodge this as a paper Form 205 with a copy of the resolution that the shareholder’s meeting passed;
• gain the minister’s approval. You will also need to gain approval from the relevant minister of the state or territory that your company is registered in. This must be attached to Form 2213 that needs to be sent to ASIC. ASIC will then send your company a new Certificate of Registration once they have processed the transfer.

Premises

Furthermore, if you need to lease an office or new stores, you need to be aware that leasing legislation differs in each state and territory. Commercial leases largely rely on the leasing documentation. However, what is considered a retail lease also varies in each state and territory. If your commercial lease is a retail lease then you may have additional rights as a tenant and your lease renewal notice requirements may also vary.

If you decide to franchise, you may decide to lease the franchise premises from the landlord yourself and then sub-lease it to the franchisee so you are able to control the location. Overall, if you are expanding interstate for the first time, it is a good idea to get advice on your commercial lease in that state or territory.

Consumer Law Differences

Although the Australian Consumer Law regime is nationwide, there are different ways to pursue legal action in each state and territory. Essentially, the Australian Consumer Law is a single national law that different consumer protection agencies enforce in each state and territory. Therefore, if you are planning to expand to reach more consumers, you should be aware of the different bodies that handle consumer complaints in each state and territory as well as the Australian Competition and Consumer Commission (ACCC).

State Tribunals and Courts

In addition to consumer complaints bodies, there are different tribunals and courts in each state and territory. For example, if you work in the construction industry you will have to work with a different building industry body in each state or territory as well as administrative tribunals and courts.

Employees

Likewise, employers should also be aware of different requirements in each state and territory in relation to their employees. For example, each state and territory has different:

• long service leave entitlements for employees;
• Work, Health and Safety requirements; and
• Worker’s Compensation requirements and regulators (even though there is a national scheme).

This article has a summary of different long service leave entitlements while the different regulators for Work, Health and Safety and Worker’s Compensation are listed below: 

Industries With Specific Requirements

Similarly, some industries have specific licensing or industry requirements that vary in each state and territory. Therefore, you should check the requirements for your industry before you expand interstate. Some of these industries include:

• hospitality, including accommodation and food industries;
• conveyancing;
• motor dealers and repairers;
• retirement villages and aged care services;
• retailers including pawnbroking and second hand dealing;
• building and construction;
• tattooists and beauty industries;
• travel agents; and
• property managers and real estate agents.

Key Takeaways

Overall, if you are expanding your business interstate you should check the requirements of each state and territory. Some of the areas to check include:

• where you want to register your company;
• commercial lease requirements;
• requirements for your employees;
• consumer law complaints handling and state tribunals; and
• specific requirements of your industry.

If you are unsure about how to comply with different laws in other states and territories when expanding your business, you can contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.