Reading time: 3 minutes

Your business is a success. You have captured a portion of the market, are generating profit and increasing your brand recognition. When this happens, you naturally begin thinking about expanding and replicating that success. One option is establishing a franchise whereby you will, effectively, allow others to use your established branding and business systems to implement a duplicate business to yours. And of course, pay you for this privilege.

Although establishing a franchise to fuel growth and increase revenue may sound great in theory, there are some questions franchisors should ask themselves before they begin recruiting franchisees.

Do I Understand What is Involved With Being a Franchisor?

The Franchising Code of Conduct (the Code) imposes strict obligations on franchisors on, among other things:

  • The provision of disclosure (usually annually),
  • The issue of breach notices, and
  • Dispute resolution mechanisms.

In reality, franchisors should implement systems of ongoing monitoring, updating, and training across the franchise network. This naturally takes time and quite a bit of it.

Is my Intellectual Property Adequately Protected?

In franchising your brand, you are allowing third parties to exploit your business’ branding, logos and intellectual property for their commercial benefit. Before you do so, it makes sense to protect your intellectual property comprehensively by registering trade marks and/or patents, and taking steps to understand copyright.

Am I the Key to Success, or the Business Itself?

Sometimes, a brand or business’ success is attributed to an individual. In that case, it’s understandable that another person may not be able to duplicate the business’ success. For example, imagine going to ‘Bondi Vet’ and not having the hunky Dr. Chris Brown attend to your pet’s needs. It just wouldn’t be the same and, no doubt, the initial success of the vet business would unlikely be duplicated by franchisees (unless they were equally hunky).

Do I Have Sufficient Funds to Establish a Franchise?

It costs money to set up a franchise, and you will need to pay for, among other things:

  • Drafting your franchise documents,
  • Protecting your Intellectual Property,
  • Recruiting potential franchisees, and
  • Software and IT updates.

It may be prudent to talk then first to your accountant or a financial advisor to determine whether you are financially ready to franchise your business.

If you are considering franchising your business, it is sensible to talk to a specialist early in the process. If you have questions about setting up a franchise, please call LegalVision’s franchise lawyers on 1300 544 755 or fill out the form on this page.

Webinars

Key Considerations When Buying a Business

Thursday 11 November | 11:00 - 11:45am

Online
Learn which questions to ask when buying a business to avoid legal and operational pitfalls, so you can hit the ground running. Join our free webinar.
Register Now

Innovation Nation: How to Make the Most of Australia’s Business Innovation and Investor Visas

Thursday 18 November | 11:00 - 11:45am

Online
Want to expand your business into Australia? You need the right visa. Register for our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer