Franchisees

If you are considering buying a franchise, you will be provided with various types of documents from the franchisor,

Including:

• Disclosure Statement
• Franchise Agreement
• Lease / Premises Licence Agreement

We can provide fast turn around and concise advice in relation to franchise documentation. We regularly provide legal advice to potential franchisees .

This area of law is complex and sound legal advice from the start will likely save a fortune later on.

Some of the matters in which you might require advice

Which structure is the right structure for you? Should you trade a as a company, in a company/trust structure or perhaps as a sole trader? Each has it advantages but one will be the most relevant to your circumstances. Getting this right will give likely give you tax effectiveness and asset protection.

The Disclosure Statement details important information about the franchisor and the history of the franchise. These things include the business experience of the franchisor, a list of current franchisees and their contact details, a list of former franchisees for the last three years, and their contact details, information relating to the territory, details relating to the marketing , the marketing fund, financial statements for the previous two and a statement as to solvency of the franchisor.

As experienced franchise lawyers we can explain clearly how this information relates to you and help guide you through the pertinent information.

The Franchise Agreement sets out the relationship between the franchisor and franchisee. Franchise Agreements are usually very detailed and tend to be drafted in the franchisor’s favour.

Careful consideration of the impact of the important clauses in the Franchise Agreement is critical knowledge if you are proposing to buy a franchise. If the agreement requires amendment you can ask the franchisor to make changes and they will very often agree.

At the very least, experience has proven to us time and time again that knowing what you are being asked to sign prepares you properly for the franchise relationship. Our advice will provide you with a through understanding or your responsibilities and rights – and those of the franchisor.

We say this because the Franchise Agreement is far beyond the glossy brochure. We will provide you with clear, straightforward advice, which will equip you to make an informed decision as to your franchise purchase.

Many franchises will be operated out of fixed business premises. This could involve you or the franchisor leasing the premises. If you lease the premises, you will both control the premises – but you will equally be wholly responsible for the premises.

A Premises Licence Agreement is effectively akin to a leaseback from a Franchisor who holds the lease in its name. This is quite a common for fast food franchises, for instance. This arrangement makes it very easy for the franchisor to move a new franchisee into the premises in the event of the franchise agreement coming to an end. Nevertheless, provided the franchise relationship remains on foot, a premises licence agreement should make little to no practical difference to a franchisee.

Many franchisees do very well over the years. The attraction is usually the tried and tested system and often the brand. These things alone can be a tremendous advantage. Buying into a franchise can be an exciting venture, but the documentation is complicated. Due to the complex nature of franchising, and the fact you will be investing significant funds into the business, it is essential that you seek assistance from expert franchise lawyers in order to understand to your rights and obligations as a franchisee. This advice, coupled with a consideration of commercial ramifications of the legal issues, will go a long way to ensuring that you have a positive franchise experience.

This area of law is complex and sound legal advice from the start will likely save you money later on.

We provide qualified franchise advice in relation to your:

• Franchise Purchase
• Pre-Purchase Due Diligence

PCL Lawyers offers advice in relation to your business structure as well as carefully considering the impact of different clauses in the Franchise Agreement and, where applicable, the Premises Licence Agreement, Lease or Sublease. 

If you have a dispute with your Franchisor, early intervention can be advantageous.

In the event of a dispute the following will occur:

Firstly, we will advise you as to your legal rights and obligations. You may have issues with the franchisor’s conduct either during the franchise or. You may have been misled as to the profitability of the franchise or other aspects of it.

Secondly, there needs to be an agreed procedure for trying to resolve the dispute. This can include correspondence with the franchisor, informal mediation or formal mediation. Mediation can be a helpful first step in resolving a dispute. This brings the parties together around a table to try to reconcile differences. We can assist in helping you with this process to ensure that your legal rights are protected and also to clearly convey your position to the franchisor.

Given that early intervention can prevent a problem or problems escalating, legal advice early can only be helpful.

Mediation is generally a pre-requisite to litigation. If mediation is unsuccessful, litigation is often the next step.

Sometimes, litigation is necessary in order to ask a court to decide to recover your losses.

Where disputes have escalated to the litigious stage, we will have already advised you as to your legal rights. Even during the litigation, there will be at least one opportunity to mediate.

Given our experience as franchise and commercial litigators you can be assured that we will defending your position with absolute vigour once the decision to commence legal proceedings against the franchisor has been made.