EDITORIAL

Get the legal lowdown on franchising in our Franchise Basics series.

Is franchising a good model for business? Why do we keep reading about poor operators cheating the system? How can you secure yourself a solid future with all the risks surrounding franchising?

Exposure to the failings of franchisees and franchisors is unavoidable these days - there is a greater focus on investigating and, if necessary, prosecuting companies that are guilty of significant breaches of the Franchising Code of Conduct (the mandatory governing regulation for the sector) and workplace legislation. The Fair Work Ombudsman is targeting underpayment of staff, and those who fall foul of the law are getting plenty of publicity. Does this mean franchising is flawed? Franchising is a method of doing business by licensing individuals to take on a brand and business model to replicate the service. As with any business structure, it’s success very much depends on the people running it - at the top level, franchisor, and on the front line, franchisee.

Australia has a heavily regulated franchising sector, and that shapes the processes all franchisors and franchisees need to abide by. Get it wrong, and you get caught out.

Most franchisors and franchisees by far are acting in good faith, but sometimes there are unintentional slip-ups.

So is franchising a good investment? There is no easy answer to this. Every franchise purchase is a business decision that needs to be based on good research and an understanding of the demands of the system.

In our previous issues this year we have looked at the basics of franchising, at what considerations need to come into play when deciding if buying a franchise is the right step for you, and at the financial issues involved.

In this edition, we’re taking a long, hard look at the law: what you need to know about the franchise agreement and other documents, how to exit a business, what happens in a dispute with a franchisor, and that topic of the moment - workplace law.

This section will give you a good sense of the legal issues, and show that it really does pay to get a franchise-experienced lawyer on board before you commit to a franchise.

Then it’s up to you…