Ten essential questions for a franchise buyer
Updated: Jul 30, 2021
There are over 850 known franchise systems in Australia operating in 64,000 outlets and employing over 600,000 people. Approximately 5,000 new franchise units are created each year. Franchising accounts for somewhere between 10% and 12% of Australia's GDP. There are three times the number of franchise systems per capita in Australia compared to USA.
MCW has a deep working knowledge of all areas of the law relevant to franchising, including:
The Franchising Code of Conduct
The Competition & Consumer Act (previously known as the Trade Practices Act)
Intellectual Property Law
General Commercial Law (ie. advice relating to the operation of a business including: leasing and taxation employment law and dispute resolution).
At MCW we have reviewed and advised on most of the major franchise systems in Australia and we act for clients on resales of franchise businesses. We also act for clients in the resolution of franchising disputes through the Office of Mediation Adviser and, where necessary, the Federal Court. If you're considering purchasing a franchise, ask yourself these questions.
Am I suited to a franchise system? Am I an independent person or a team player? How will I cope with the risks and demands of being a business owner?
What kinds of information should I get from the franchisor for my assessment of the franchise business?
Am I permitted to speak to other franchisees before I buy?
If, after reviewing the information, I do not want to go ahead with the purchase, can I withdraw? If so, will I get back the money I have paid to the franchisor?
Are there any requirements or qualifications that I need to meet before I can buy the franchise?
Will the franchisor provide ongoing training and support? Do I need to pay for this?
Do I have to purchase all supplies from the franchisor?
What if the franchise business does not do well? Do I have the right to terminate the franchise agreement early?
If I want to sell the franchise business, can the franchisor refuse to give consent?
After the franchise agreement ends, can I still operate a similar business at the same premises using a different trade name? Can I keep the employees that have worked for me?
Purchasing any business is a significant financial and lifestyle decision. We recommend you seek advice before proceeding and welcome you to Contact Us to make an appointment to discuss your situation.