About Franchising
Franchising, as a method of doing
business, has achieved tremendous worldwide growth in recent years.
In Australia, survey results published in 2016 estimated that there
were about 1,120 franchise systems operating in Australia*.
At The Franchise Lawyer, we suspect this figure is considerably
higher.
Compared to other forms of carrying
on business, franchising has many attractions. For a
franchisor, it allows the growth of its business system without the
investment required for the whole of the infrastructure. It
also promotes incentive for the individual business operators to
perform well. For franchisees, franchising allows a measure
of business independence but with a ready-made system and the
benefits that can flow from the pooling of resources.
All the laws that generally apply
to commerce, for instance contract and trade practices laws, apply
to franchising in Australia, but in addition, since 1998
franchising has been specifically regulated. The Trade
Practices (Industry Codes - Franchising) Regulations 1998 came
into full effect on 1 October 1998 and introduced a Franchising
Code of Conduct that must be followed by franchisors and
franchisees in their dealings with one another. Following a lengthy
review which began in 2013, the Code was revised and a completely
new Code came into effect on 1 January 2015.
It is essential to have a good
grasp of the Code in its current form to operate legally in the
franchising sector.
*'Franchising Australia 2016', a
study conducted by Griffith University and sponsored by the
Franchise Council of Australia.