• No. It is not compulsory to renew the franchise agreement.
• If the duration of the franchise agreement is for less than 6 months you must let the franchisee know of your decision to either
  • renew the agreement;
  • not renew the agreement; or
  • enter into a new agreement

       at least one month before the end date of the agreement.

• However if the agreement is made for a term longer than 6 months you are required to let the franchisee know at least 6 months before the end date of the agreement.
• You might like to use our Fixed Fee Quote service to call for tenders from lawyers to help you draft or review your franchise agreements.

• The Franchising Code of Conduct sets out how termination can occur. Whether and how a termination can occur depends on the circumstances.
• Different requirements will exist depending on whether the franchisee has:
  • breached the franchise agreement or there are special circumstances which apply (set out in detail in the Code); or
  • the franchisee has not breached the agreement and the franchisor still wants to terminate the agreement without the consent of the franchisee.

• If there has been a breach but it has been remedied within a particular time frame the franchisor cannot terminate.
• If there has been no breach the franchisor may have a right to terminate but only if this is provided for in the franchise agreement.
• The franchisor can terminate the agreement if there are special circumstances such as where the franchisee:

• becomes bankrupt;
• no longer holds a required license;
• abandons the franchise; or
• is convicted of a serious offence.

• The rights of a franchisee to cancel the agreement are not very strong.
• Usually the franchisee can terminate their agreement within seven days of having entered the agreement (the cooling off period) or where their franchise agreement allows them to terminate.

• The law in this area has recently changed. Franchisees and franchisors are obliged to act in good faith in their dealings with one another.
• Prior to 1 January 2015 the Code did not specifically mention an obligation to act in good faith although there was always an expectation that the parties would comply with this maxim as it is imposed by general law (the common law). Since 1 January 2015 the Code now expressly requires the parties to a franchise agreement to act in good faith.
• If you have any concerns about whether particular conduct is in good faith you can use our free and anonymous Ask a Lawyer service to get information specific to your situation.

• Yes, it is usually possible to sell the franchise business to a new franchisee. However this process is usually far more difficult and restrictive than selling your own independent business.
• The terms of the franchise agreement will usually govern when and how this is to take place.
• The franchisor will generally have the right of first refusal meaning that you must offer to sell the business to the franchisor before investigating other purchaser options. If the business is having difficulties it is unlikely the franchisor will want to buy it back.
• In this situation the franchisee will be required to source potential buyers for the franchise. If the business has not been successful the price may not be the same as what you originally paid for it.
• In addition the franchisor will usually have to approve the person who intends to purchase the franchise including undertaking a process of examining them to ensure they are a suitable representative for the brand.
• If you have found a purchaser the Franchising Code of Conduct states that a franchisor cannot unreasonably withhold consent to you transferring or selling your franchise business.

• There are thousands of different franchise options in Australia. You should choose a franchise:

• that you are passionate about;
• that is affordable; and
• which will allow you to meet your personal and financial goals for business ownership.

• It is also worth considering if a franchise is right for you or whether starting your own independent business that gives you more control over brand development would suit your personality better.
• Although having already established procedures takes some of the confusion and difficulty out of starting your own business you will still find it a struggle if you do not have the required skills and expertise to operate a business in the specific industry to which your franchise relates.
• Understanding the fee structure and the compliance and operational requirements for your prospective franchise will also ensure that you and your franchise are a suitable fit.
• You can use our Phone a Lawyer service for a preliminary legal consultation if you think you may need legal advice.

• Whether you see the characteristics of a franchise as advantages or disadvantages will strongly depend on your personal goals and expectations about business ownership.
• A franchise requires the franchisee to follow operational manuals and processes closely to achieve a level of uniformity and consistency between franchise outlets. You generally do not have a lot of autonomy in the day-to-day decision making regarding products or store appearance.
• If your aims are to start your own business and bring your unique idea to life a franchise is probably not for you.
• Alternatively if you are passionate about a pre-existing brand concept then purchasing a franchise can give you the opportunity you desire and cut out a lot of the legwork.
• You should also be willing to work collaboratively with a franchisor who will often be responsible for decisions concerning the direction of the brand that will need to be implemented by all of the franchises. 

• Each individual franchisee is usually responsible for setting their own prices. A franchisor sometimes provides a list of recommended pricing but there must be scope for franchisees to make adjustments according to their particular situation. This includes the franchisor being unable to stipulate a minimum price below which products or services must not be sold. 

• Generally a franchisor is able to provide guidelines on the types of products and services to be provided by their franchisees.
• However requiring that franchisees only purchase goods or services from a set provider can be a type of 'exclusive dealing' that is prohibited by the Competition and Consumer Act 2010.
• A franchisor would be advised to notify the Australian Competition and Consumer Commission (ACCC) if they intend to stipulate a set list of suppliers.
• This is different to requiring the franchisee to buy goods from the franchisor itself or a related company particularly in the context of a retail franchise.
• The area of law concerning anti-competitive trade practices and supplier arrangements is complex and it is advisable to obtain legal advice on your particular scenario. Our free Find a Lawyer directory may help put you in touch with the assistance you need.