What is Franchising Law?

Franchising law guides the rules and regulations governing the operation of franchises and focuses on the relationship between the franchisor (the owner of the brand and business model) and the franchisee (the individual or entity granted the right to operate a franchise location). It covers various aspects, including franchise agreements, disclosure requirements, intellectual property rights, operational standards, and dispute resolution mechanisms. This area of law ensures that both parties adhere to legal obligations, protecting the franchisor’s brand integrity while safeguarding the franchisee’s investment. Additionally, franchising law may include compliance with federal and state regulations, fair trading practices, and ongoing support requirements to maintain a successful and legally sound franchise system. Some key elements of this area of law include:

• Regulation of Disclosure Requirements/Compliance: Franchisors must provide potential franchisees with a Franchise Disclosure Document (FDD) that includes important information such as fees, financial performance, and the franchisor's history. This is part of the broader laws governing Franchising in Australia under the Australian Consumer Law and the Franchising Code of Conduct.
• Franchise Agreements and Other Documentation: This is the contract between the franchisor and franchisee detailing the terms and conditions of the franchise, including the rights and obligations of both parties, including in relation to termination and renewal. Franchise Documentation may also extend to licences to occupy premises leased by the Franchisor on behalf of the Franchisee, supply agreements and more.
• Intellectual Property: Franchise agreements usually include provisions to licence franchise IP to the Franchisee, as well as protect the franchisor's trademarks, logos, and proprietary information.
• Dispute and Litigation: Disputes often arise from breaches of contract, misrepresentation, non-payment of fees, territorial disputes, and disagreements over marketing and advertising. Mediation is a common first step in resolving franchise disputes. Where mediation fails, disputes may proceed to litigation, including taking the matter to court, where a judge will make a binding decision. Experienced franchise lawyers can provide valuable assistance in navigating disputes.