To subscribe visit:
http://www.businessfranchiseaustralia.com.auFranchise
AUSTRALIA AND NEW ZEALANDBUSINESSSUBSCRIBE TO
Business Franchise Australia and New
Zealand’s newsletter and receive all
the latest franchising news delivered
straight to your inbox, every week!
WANT TO STAY ON
TOP OF THE LATEST
NEWS AND WHAT’S
HAPPENING AT THE
FOREFRONT OF
FRANCHISING?
ExpERT ADvIcEoBtAiN Food BAsed
liceNses
Another important clause in the franchise
agreement is the requirement to obtain
all applicable licenses before you start
operating. In the case of a food franchise,
this clause refers to the State or Territory
and local regulations that govern the right
for you to operate a business that serves
food. For example, in NSW you will require
local council approval to operate, as well
as to hold qualifications related to food
preparation.
If you fail to obtain the necessary approvals,
qualifications and licences, you could be
prevented from becoming a franchisee. Also,
if you lose your qualifications during the
term of the franchise, you will be considered
in breach of the franchise agreement, and the
franchisor could terminate the relationship.
Before rushing off to secure the relevant
qualification and obtaining council approval,
first speak with the franchisor. If you are
taking over an existing food franchise, then
it’s more likely the approval is already in
place (although it never hurts to have your
lawyer confirm). As to your qualifications
in professional franchise systems, thefranchisor will provide very clear guidelines
regarding what they require in their system.
Generally, their standard training processes
will cover off the licences and qualifications
required (after all, this is one of the benefits
of purchasing from an established franchise
system). It is important that any licences
are transferred to you on purchase. You can
confirm this with your legal advisor.
Franchisees should also check that the
existing business is compliant with
current food safety regulations and have
no reputation-damaging fines or adverse
findings by the regulators. Most states
have a register of penalty notices from food
authorities, and if you are buying a business
that has recently been publicly named and
shamed on the schedule, you could be in
for an unpleasant surprise. We recommend
checking this register and of course, search
online for reviews and any associated news
regarding the business before purchase.trAiN iN g
Food-based franchises can require extensive
and lengthy training of their franchisees
(and their employees). McDonald’s are well
known for requiring franchisees undertake
between 9 and 12 months of job training.Ensure that you clearly understand what
you are committing to before commencing
the process. You may realise that you don’t
have the capacity to undertake six months
of training or cannot afford to forfeit any
income during this time.FA miliArise Y ourselF With
the FrANchise AgreemeNt
Irrespective of what type of franchise you
purchase, the franchise agreement will be the
central document governing the relationship
between you and the franchisor. Take the
time to clearly understand your obligations
under the franchise agreement, for example:
• initial and ongoing fees;
• each party’s obligations under the
franchise agreement, including upcoming
equipment upgrades, obligations for
ongoing training, and obligations to
purchase from particular suppliers for
particular goods (such as special sauces
and food supplies you are required to
purchase from the franchisor); and
• exit provisions (both for selling and
terminating the franchise agreement).K e Y tA Ke AWAYs
Buying a food based franchise is an exciting
venture. But before you commit to a
franchise term, consider the issues unique to
the industry and conduct your due diligence.
This means checking your equipment,
reading through your lease agreement,
obtaining any licences and qualifications
and assessing whether you have the resources
to commit to training. Finally, always
remember, if you have any questions - speak
with your franchisor and legal advisor.Masao Watanabe is a franchise lawyer at
legalVision. during his time with the
team, Masao has worked closely with a
number of high profile franchisors and
has assisted them with drafting franchise
documents and resolving disputes, as well
as advising on a broad range of general
commercial matters.
Through this work, Masao has developed
an in-depth understanding of franchise
law in Australia and a strong appreciation
of how to apply it in a commercial
context.
1300 544 755
http://www.legalvision.com.au“it’s not unusual for a franchisor to expect
franchisees purchase new equipment to take
into account new food offerings.”fEATURE:
Food & Bever
Age