About Franchising

Franchising, as a method of doing business, has achieved tremendous worldwide growth in recent years. In Australia, a survey conducted in 2008 found that there were about 1,100 franchise systems operating in Australia, an increase of about 14.6% from 2006*.

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. The Code was amended in March 2008 and is regularly targeted for further review.

It is essential to have a good grasp of the Code in its current form to operate legally in the franchising sector.

*‘Franchising Australia 2008’, a study conducted by Griffith University on behalf of the Franchise Council of Australia