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If you intend to open a pizza restaurant, it is essential you are aware of your legal considerations. The pizza restaurant and takeaway industry in Australia is growing. Currently, there are over 6,000 pizza restaurants and takeaway shops in Australia, most of which are independently owned. If you are looking to open up a pizza shop, purchase a pizza franchise, such as Domino’s Pizza or Pizza Hut, or sell your pizza business, this article sets out the legal considerations for business owners in this industry.
Setting up a Pizza Restaurant
While you may have a gourmet pizza menu and an impressive fit-out idea, there are several legal hurdles to jump over before you can deliver your first pizza.
Business Structure
Your business structure should be one of your first decisions as a business owner. If you are not joining a franchise network, you will have to decide whether to set up as a sole trader, partnership or company. Each business structure has different advantages and disadvantages, including:
- establishment costs;
- tax planning; and
- business owner liability.
A company structure may be the way to go if you want to grow your business. In a company structure, you limit your personal liability, making it easier to take on investment from external parties.
Lease
Leasing considerations will also be the key to the success of your business. Ensure you carefully review your commercial lease, whether it is in a shopping mall or a suburban outlet. When reviewing your lease, you should examine:
- rental clauses and options to renew;
- whether competitors can open in your area; and
- costs to fit out your store.
One of the key success factors in this industry is proximity to key markets.
Before buying a business, it is important to undertake due diligence, to verify the information supplied by the seller. This guide will walk you through the due diligence process.
Staff
A key consideration when starting any business is whether you employ staff to assist in the running of that business. You will likely need to employ a few key staff when opening up a pizza business, namely a chef, kitchen staff, and potentially front of house or even wait staff, depending on the type of restaurant you open. Employment regulations are stringent in Australia. You must ensure you abide by the awards and rules in legislation to protect employees. It is prudent to have employment agreements with employees to set out the rights and responsibilities of both the employer and the employee.
Franchise Agreement
If you go down the route of purchasing a pizza franchise business, it will be essential to have the franchise agreement reviewed by a lawyer. As a franchisee, you must seek independent legal advice before signing the franchise agreement. Franchise agreements are complex legal documents, and you want to ensure you understand your obligations under the agreement before signing the agreement and setting up your pizza business.
Food Regulations
With any business in the food industry, strict regulations surround the health and safety of food preparation and consumption. In Australia, the Food Standards Australia New Zealand regulates all businesses in the food industry. As a food industry business, you must adhere to the Australian New Zealand Food Standards Code. For example, if you are purchasing a pizza store, you should inspect food safety records and ensure that the premises have had a clean record in maintenance and food preparation.
Consumer Law Considerations
In addition to food regulations, pizza establishments in Australia are also subject to consumer laws such as the Competition and Consumer Act 2010 (Cth), which includes the Australian Consumer Law (ACL). The ACL sets out regulations concerning marketing and false and misleading claims. As a business owner, you should not make any marketing claims that you cannot substantiate or otherwise provide offers or deals you cannot honour. If your business accepts online orders, you should also consider whether you need website terms and conditions or a privacy policy on your website.
Key Takeaways
In summary, to succeed in the pizza industry, pizza restaurants must differentiate themselves through product offerings and service delivery. In addition, due to the high competition within the industry, many businesses are now embracing gourmet and healthier options despite higher price points. There are also key legal considerations to succeed in this industry, including business structuring and leasing. Furthermore, you must adhere to food regulations can prevent penalties and loss of profits.
If you need help setting up your pizza restaurant business, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Continue reading this article below the formFrequently Asked Questions
Yes, in Australia, the Food Standards Australia New Zealand regulates all businesses in the food industry. Therefore, you must adhere to the Australian New Zealand Food Standards Code as a food industry business.
Not necessarily. If you are not joining a franchise network, you can decide whether to set up as a sole trader, partnership or company.
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