Power Play
Franchise systems, like any business, can be privately or publicly owned. Shareholders are an integral part of corporate structure in the big end of town and have flexed their muscles in the GFC, so what impact can they have on a franchisee's own business in a public company? ...
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Franchising, Marriage and gut feelings
Ashton Kutcher is reported as commenting of his marriage to Demi Moore that "Sometimes the most illogical decisions you make in your like can be the best ones when it comes to love. In a lot of cases when you think too much about things you make the wrong decisions."...
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The end of the Trade Practices Act
This heading was deliberately chosen, instead of the more prosaic “The New Australian Consumer Law Reforms” to grab your attention. It is, like a tabloid newspaper headline and some representations in pre contractual negotiations that have featured in s52 cases, literally true but nevertheless misleading. The Trade Practices Act...
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How much is too much for exiting directors and executives?
There has always existed an uneasy balance between shareholders' rights and large payments to directors and executives. Recent government reform has tilted the balance towards shareholders. Shareholders and value Maximising share value is a key concern for any shareholder. Large, lump sum payments to directors and executives...
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Does my company need a Shareholders’ Agreement if we have a constitution?
We are frequently asked this question and our answer is always "Yes, if your company has more than one shareholder". Constitutions set out the rules governing the general rights of shareholders such as the conduct of directors' and shareholders' meetings and the appointment/removal of directors. Shareholder Agreements...
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Austrade Expands its Grants
Austrade continues to support businesses expanding internationally with further grants offered for IP protection – are you eligible? As part of the 2008 legislative changes to the Export Development Market Grants (EMDG) scheme, businesses can now claim expenses under a new category Intellectual property registration and related insurance. ...
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Corporate Structures - What do you really need?
The world of corporate structures is frequently a maze. What do you really need to protect your assets and maximise the potential for wealth creation? At a basic level, businesses are composed of a number of different “asset” types : intellectual property; plant and equipment; and cash The main...
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Making Sense of Jim's Franchise Saga
That master franchising is commercially difficult as well as a legally complex relationship is amply demonstrated by the widely reported problems within the Jim’s Group – Australia’s largest franchise system in terms of outlet numbers. Although Australia Post is usually credited with being our largest franchise network, the majority...
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Franchising and Corporate Structures
Leonid Ervits, Senior Solicitor at DC Strategy explains the various business structures potential franchisees may encounter when exploring business oportunities. 1. Single Company vs. Corporate Group My franchisor has a number of companies for the operation of the franchise network. Why do franchisors do this? Franchisors may choose...
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To "Fix" or to "Float"
Companies are often required to provide assets as security for loans and agreements through the use of fixed or floating charges. It is important to consider the implications of each type of charge. A charge is a type of security that can be taken over the property of a...
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National Unfair Contract Laws Spark Need To Review Standard Contracts
If your business uses standard form agreements when dealing with consumer customers, you could lose the protection of those contracts after 1 January 2010. Sweeping changes to the law will make terms of your consumer contracts unenforceable if they are considered to be ‘unfair’. Pretty well all sorts of...
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Taking your brand international
Is your most valuable asset protected when your business is going global? Protecting your brand in the countries selected for growth is paramount. If you are considering expanding your business internationally, then your first objective should be to ensure your brand is protected in the target country. This...
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International Franchising
Australia is recognised as a highly regulated country when it comes to franchising. While other countries have some degree of regulation, many are yet to follow. Franchising is a relatively new but developing business model in many countries. However, a lack of specific laws on franchising and the overlapping...
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Before You Sign
I'm looking to buy a franchise and received the disclosure document and franchise agreement... What do I do now? Many individuals view franchising as a quick and easy way to start their own business. However, the purchase of a franchise consumes a substantial sum of your money and provides...
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Businesses beware – new unfair contract laws pending
Businesses should take note that on 11 May 2009 important new draft unfair contracts legislation was released by the Rudd Government. The changes could mean that businesses need to change the way they contract with other businesses, clients, employees, and other parties. The criteria for determining an unfair contract...
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Someone is using my trade mark as a Google AdWord!
Current trend There has been a marked increase in the number of trade mark owners finding opportunistic third parties have used their registered trade marks as Google AdWords. There are two questions that logically flow from this predicament: · Is this conduct lawful? · What action can...
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Legal Focus: Franchisee Recruitment
The Franchise Recruitment Process: Understanding your legal rights and obligations as a prospective franchisee. The franchisor’s application form requires prospective franchisees to provide information of a personal nature. Will this be kept confidential? The Privacy Act 1998 (Cth) ("Privacy Act") sets out the National Privacy Principles, which...
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More regulation for the franchise sector
Franchisors face increasing levels of government regulation and compliance costs if the proposals in a recent Federal Government discussion paper become law. The Council of Australian Governments has agreed to work towards establishing new national consumer laws. If enacted, this proposal would replace various state legislation and redefine some small...
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ACCC tightens mergers & acquisition rules
Businesses contemplating mergers or acquisitions should consider the new, more stringent rules adopted by the ACCC regarding notification. Background The current economic downturn has seen a slow down in the rate and value of mergers and acquisitions. A year ago activity was strong and showed no apparent sign of...
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Cartels: what are they and how do I avoid them?
Businesses may unknowingly be engaged in cartel activity, as many everyday situations could potentially breach the cartel provisions of the Trade Practices Act 1974 (the TPA). A cartel is an anti-competitive arrangement between two or more businesses, which includes international agreements. This type of anti-competitive arrangement can take many...
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Questions and Answers
I have entered into a sale of business agreement for an existing franchise only to find out after agreeing to the purchase that there is no guarantee that the lessor will provide the franchisor with a new lease. Can I terminate the contract? Statistically the average tenure of...
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Turning down the heat
Rod Young discusses the lessons to be learned from recent Australian Competition and Consumer Commission investigation into one of Australia's top franchisors...
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Questions and Answers
Unconscionable Conduct: What is it and how can it affect your franchise business dealings? Unconscionable conduct deals with harsh and oppressive conduct in busines transactions. Generally defined, it is conduct which is so unreasonable that it goes against good conscience. The Trade Practices Act prohibits unconscionable conduct in relation to...
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Changes to the Retail Leases Act
As of the 1st of January 2006, amendments to the Retail Leases Act came into effect across New South Wales. The changes endeavor to update the 1994 Act, making it easier for retailers and landlords of retail shops to do business in NSW. New security bond regime The most significant...
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Before you sign
I'm looking to buy a franchise and recieved the disclosure document and franchise agreement ... what do I do now? Many individuals view franchising as a quick and easy way to start their own business. However, the purchase of a franchise consumes a substantial sum of your money and provides...
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First right of refusal
Planning on selling a franchise business requires attention and consideration of the franchisee’s obligations under the franchise agreement. In most cases the franchisee has an obligation to the franchisor in respect to the sale and exit from the franchise system. What are some of the obligations that a franchisee may...
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Franchisor or Franchisee ...
Are you a Franchisor? Putting aside the challenges faced when moving from a sole operator to a multi-unit operator and then becoming a Franchisor, you need to consider whether your business structure meets the criteria provided under the Franchising Code of Conduct. Whether you like to label your business...
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Buying a foreign franchise
It is through franchising that some of the world’s largest and best-known brands have achieved international success. Such success is generally attributed to the export of franchise systems across the globe via a number of methods. Often reported as the most successful method of product and service distribution developed...
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What is a Master Franchisee?
It is through franchising that some of the world’s largest and best-known brands have achieved international expansion. Such expansion is generally attributed to master franchising. If a franchise is expanding via master franchisees, it means they’ve contracted with a person or entity to provide services to franchisees in a...
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Company Names or Business Names ...
Company Names or Business Names ... do they give you better protection than a trademark? As a commercial and franchise lawyer I am constantly advising clients of the invaluable differences between registration of a Company Name or Business Name and the registration of a Trade Mark (word mark). It...
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Branding ... what are you paying for, and does it really exist?
Franchisees purchase a franchise based on the brand, system, intellectual property and or product or service, which it delivers. What is the ‘Brand’ and why is it that franchisees pay significantly for it? What's a brand name? Though a product or service is the core of a business...
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Colour Trade Marks
The Trade Mark Act allows colours to be registered as trade marks. However, it is evident from recent court decisions that protection of a colour trade mark is not automatic. Prior use of the colour and how consumers recognise those colours are matters which are taken into account by the...
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Unconscionable conduct: What is it and how can it affect your franchise business dealings?
Unconscionable conduct deals with harsh and oppressive conduct in business transactions. Generally defined, it is conduct which is so unreasonable that it goes against good conscience. The Trade Practices Act prohibits unconscionable conduct in relation to conduct directed towards small business under section 51AC of the Act. In...
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