5 things you
need to know
about
Franchise Documents
- The conduct of franchisors is regulated in Australia. This means that if you are planning on franchising, it is important that you understand that your conduct must comply with the Franchising Code of Conduct. This dictates everything from the documents you must provide prospective franchisees to how you treat franchisees to how disputes must be handled.
- The primary document you must prepare is the franchise agreement. The franchise agreement serves as a contract between you, as the franchisor, and the franchisee, outlining the terms of the franchise. This will include upfront and ongoing payments and ongoing obligations.
- Under the Franchising Code of Conduct, you must also provide prospective franchisees with a disclosure document, key facts sheet as well as other ancillary documents. The disclosure document summarises the franchise agreement and is part of the package of documents your lawyer should prepare. The disclosure document and key facts sheet must be updated once a year.
- Franchising is a specialised field. Therefore, you should collaborate with a lawyer with the necessary expertise. Issues within franchise agreements can be challenging and costly, especially if you have created your templates with a lawyer who is not experienced in franchising or if the templates contain provisions contrary to the law.
- Lastly, whether you are a prospective or established franchisor, it is important to review your documents comprehensively and regularly. This applies to not only your franchise templates but also your normal business contracts, including any employment agreements, commercial/retail leases, and customer-facing contracts. This is important to ensure your network and documentation align with all relevant laws.
