THE PAPER CAPER
Sign your way through the essential paperwork.
Thanks to technology, you can now set up companies as well as apply for ABNs, business names, loans, insurances and licences online. Yet many aspects of setting up a business still require you to deal with volumes of paperwork.
As you set up in business as a first-time franchisee, you will be confronted with a pile of documents and
registrations you need to process.
There are four main circumstances involving paperwork you may face if you are buying into a franchise:
• You apply for a business loan
• You apply for certification and/or a licence necessary for your new business
• You apply to enter into a lease for your premises
• You receive the documents relating to the franchise, such as the franchise agreement and the disclosure document.
Most new franchisees will probably need a loan to fund either setting up the business or buying out an existing franchisee. Whichever the case, you need to ensure your paperwork is in order if you are to be successful with your loan application.
While many financial institutions let you to start your loan application online, completing the procedure usually requires you to:
• Review the loan agreement in paper form
• Review any guarantees attached to the loan agreement
• Submit personal financial documents in support of the loan agreement. To carry on a business in certain industries, even as a franchisee, you may need a licence. For example, if you will be serving alcohol on your premises, you will need to obtain a liquor licence.
In New South Wales, certain types of liquor licences (such as those for hotels and bars) require you to consult with the community and prepare a community impact statement.
Similarly to licensing, you may need certification to run your business. For example, in New South Wales certain food businesses must hold Food Authority certification, such as an FSS (Food Safety Supervisor) certificate, depending on the type of food being served to customers.
When it comes to your business premises, if your franchisor does not hold the lease or negotiate one on your behalf with the lessor, you will need to do this yourself. It is better to engage an agent or solicitor for this.
All lessors work differently, but most will need paperwork from you to support your lease application. This generally involves financial documents relating to you or any business partner, your company or proposed trading entity, and any other proposed lessee.
Once your lease application is accepted, you will need to read all the
All lessors work differently, but most will need paperwork from you to support your lease application.
terms of the lease agreement provided to you. This is a good time to seek legal advice.
In general, lease documents are voluminous, often exceeding 50 pages.
But wait, there are more documents yet...
Under the Franchising Code of Conduct, the franchisor must provide you with certain documents:
• The information statement
• The proposed franchise agreement
• The disclosure document
• A copy of the Franchising Code of Conduct (commonly referred to as “the Code”).
The information statement is a standard document highlighting some of the risks and rewards of franchising, and must be provided to all new prospective franchisees.
The franchise agreement is the contract between you and your prospective franchisor. It sets out the rights and obligations of the franchisor as well as your rights and obligations as franchisee.
Find in the disclosure document information important for running the franchise business. It should include background details of the franchisor and an insight into the corporate structure of the franchise network. This will enable you to make an informed decision as to whether you accept and sign the franchise agreement.
As well as the documents required by the Code, and depending on the franchisor, you will often also receive the following documents:
• A certificate under section 10 (1) of the Code
• A certificate under section 11 of the Electronic Transactions Act 1999
• A licence to occupy the premises (if the franchisor holds the lease)
• A supply agreement ( or more than one) for the supply of the goods to the business
• A fitout agreement ( to prepare the premises for your business)
• A general security deed
• Various authorities, such as a trust account authority allowing the franchisor’s solicitors to release any monies to the franchisor they hold on your behalf in their trust account. Joining a franchise business can be exciting and rewarding.
Just ensure you are aware of the details in all the paperwork, as this will help position you to succeed.