Everyone knows that Australians are well-travelled people and this can positively affect the franchising sphere as Australians become acquainted with and have an affinity for international brands. Many of our clients come to us after they have spoken to businesses overseas looking to break into the Australian market and wonder what are their options. Although there are multiple options for expansion, franchising could be a viable option that brings benefits to both parties.
Simply thinking that a particular business will work well in Australia will not guarantee your business’ success if you choose to open in Australia. You will need to undertake considerable market research as well as develop your business plan. The most important points you need to keep in mind include:
- Understanding how the business operates;
- Considering to what extent you will be working together with the business owner;
- Determining the level of control the business owner will have once you bring the business to Australia (e.g., will they have a say on where you will be operating?)
- Negotiating with the business owner so you secure the necessary authorisation to use the business system as well as their intellectual property, including trade marks.
How Do I Start?
Once the commercial aspects of the deal have been worked out and you are ready to bring the business to Australia, you will need to have a licence agreement that outlines the terms and conditions of your business relationship. The licence agreement should address the following:
- Payment of fees (if any);
- Services provided by the business owner;
- Territory or area of operation;
- Use of intellectual property; and
- Level of support including training or annual meetings.
As the licensee in Australia, you may be receiving a licence agreement that the business owner’s legal representative in their country of origin drafted. Consequently, you may enter into an agreement governed by another country’s laws. This is important to keep in mind in your discussions with the business owner as in the case of a dispute, you will likely only have recourse in a jurisdiction outside of Australia.
What Does it Mean to be the Master Franchisor?
Being a master franchisor in Australia usually means that you have the authority to sublicense your rights to other businesses in Australia. As a result, you are authorised through your licence agreement to set up franchisees in Australia. If you have these rights, you would need to set up franchise documents that are compliant with the Franchising Code of Conduct and this will be the basis of your relationship with the franchisees. As the master franchisor of a country or territory, you will have a significant level of authority to expand the business.
The above diagram represents the process at which you can bring an overseas brand to Australia and the legal documents you would need to get the process started. If you have any questions, get in touch with our franchise lawyers on 1300 544 755.