Embarking on a franchise venture in Australia is more than just a business decision; it's a step towards realising entrepreneurial aspirations with the guidance of seasoned experts.

Starting a franchise combines the innovative spirit of a startup with the stability of a recognised brand. This guide from our team of legal experts is designed to ensure you're well-equipped to turn your franchise vision into a thriving business.

Over the last couple of years, the Franchising Code of Conduct has increased the disclosure obligations on franchisors. However, franchisors have always had to make sure that, in simple terms, they deliver what they promise to franchisees.

Under the Australian Consumer Law, franchisors can be liable where they engage in misleading or deceptive conduct – which can include promising an amount of start-up costs without a reasonable basis.

The Federal Court recently found that this is what took place within the ‘UFC Gym’ system in Australia.

In late 2021, the much-anticipated Franchise Disclosure Register was announced by the government of the day. Around that time, Holman Webb dove into what the register would look like, and what franchisors would need to do to prepare for its introduction. See our November 2021 article ‘The Franchise Disclosure Register – What is it and When Does it Begin?’.  The register is now in force.

Key Takeaways:

• Franchisors must, if they haven’t already, create a profile on the Franchise Disclosure Register as soon as possible and provide the mandatory information.
   
• The profile and information provided should be updated at least annually. Franchisors should also take care to make sure the information provided is consistent with their disclosure document and key facts sheet.

There is no question that one of the most high-profile legal issues at the moment relates to privacy and data control.   

Recent privacy breaches have highlighted that Australia’s laws may not be as effective as we would like in requiring businesses to take appropriate precautions to prevent the inappropriate release of private information and personal data.

In part, this may be because Australia has a very low penalty regime with respect to privacy breaches. This, and other relevant matters, are currently being considered - and an update to the Privacy Act 1988 has now been drafted and introduced into Parliament.

The Privacy Legislation Amendment (Enforcement and Other Measures) Bill 2022 considers some of the core elements referred to in the 2021 Exposure Draft. In particular it increases penalties for data breach.  Currently, a corporate entity could be exposed to penalties of up to $2.22 million.

Moving forward, under the new regime, penalties will be the greater of:

• $50 million;

• 3 times the value of the benefit obtained by the company; or

• 30% of the adjusted turnover of the company during the period in which the privacy breach occurred.

Non-corporate entities and individuals will have their penalties raised from $444,000 to $2.5 million.

Franchise agreements often contain restraints of trade. The restraints typically apply for a period of time after the franchise ends, and may restrict franchisees from competing with the network or conducting a similar business within a particular geographical area.

Whilst these restraints can be legitimate and important protections for the franchise network, they can also be a major hinderance for franchisees looking to move onto their next venture.

Clause 23 of the Franchising Code of Conduct can be a way for franchisees to avoid the operation of these restraint clauses. However, it has quite a narrow application - and there numerous proactive steps that franchisees must take to obtain the benefit of the exception.

In life, and especially within the context of commercial arrangements, circumstances can arise where despite the best intentions and efforts of all stakeholders, things don’t work out. It can be nobody’s or everybody’s fault.

Franchise relationships are no exception, as was highly publicised in the inquiry into the operation and effectiveness of the Franchising Code of Conduct, which concluded in 2019.

This guide sets out, in brief terms, the options available for those looking to exit a franchise.

The guide assumes that there has been no breach of the franchise agreement by either party, as this will involve different considerations and processes.

The Franchising Code of Conduct may be about to change again - this time, to introduce a ‘Franchise Disclosure Register’.

It remains to be seen whether the exposure draft of the changes will become law (through changes to the Code), and if so whether any amendments are made as a result of the consultation process. Regardless - in anticipation, Holman Webb’s Franchising & Retail Group has answered some FAQs in respect of the introduction of the register.

The highly-anticipated changes to the Franchising Code of Conduct are now in force.

These changes follow a parliamentary inquiry into the Code, which began in 2018. The inquiry saw many franchisees explain how their franchised business failed, and the consequences on their lives. It also exposed questionable business strategies by some franchisors, and has directly led to at least one enforcement action by the Australian Competition and Consumer Commission.

It is important for both franchisors and franchisees to understand that significant changes to the Code are now in force – many of which involve imposing civil penalties for breach.

This article contains a summary of five core areas that have seen significant change. 

Holman Webb Lawyers is proud to relay that the firm has been listed as a finalist in two categories in the Lawyers Weekly Australian Law Awards 2021:

• Law Firm of the Year
• Insurance Team of the Year

Click through for more information on this year's finalists, and upcoming winner announcements.

Trade marks are the essence of franchising. 

All franchise systems strive for widespread recognition of their 'brand'. A common thread between successful franchise systems is that their customers receive a consistent level of quality in goods and services provided under instantly recognisable trade marks. 

However, there are often complexities in the registration and use of trade marks within a franchise system. For franchisors, getting the licensing right is not always clear cut, nor is being able to secure registrations for new products. On the other hand, franchisees will often enhance the reputation of a trade mark, but have no ownership interest and can carry the risk of infringing a competitor's trade mark. 

This article explores the importance of trade marks to a franchise system, and the key parties involved in it.