Your expansive guide to franchising’s legal frameworks, and what a business should look for when it comes to comprehensive counsel
Interview by Kieran McLoone, deputy editor for Global Franchise.
The legalities of franchising might not be the most outwardly thrilling subject associated with this dynamic and global business model, but it’s a specialism that is intrinsic to international success.
Protecting your brand from a whole litany of legal troubles can only be done with an experienced, knowledgeable team. Foregoing proper system and processes will open a brand up to issues which could damage not only the brand’s reputation, but could also jeopardize an entire franchise network.
To cover everything you need to know and highlight some key trends within the industry, we’ve spoken to several experts from a plethora of legal firms and have prepared a crash course for brands with global ambitions.
KM: How has technology affected the work that franchise lawyers conduct?
PC: What we have been seeing – and I think this will continue – is the use of technology and legal process management to maximize output at a reduced cost to the business, freeing the legal team up to do more valuable work.
This is either through the outsourcing of repetitive work such as issuing of franchise agreements and dealing with renewals, where law firms use technology to manage the process cost-effectively or setting up self-serve systems with in-house teams.
We are also seeing technology being used to manage risk, collate and organize documents, note key dates, and ensure that documents are properly signed. This is an area that we are focusing on with clients currently and expect this to be increasingly important as techniques and technology evolve.
KM: What differentiates the Australian franchise market from a regulatory perspective?
RM: Australia’s franchise system is highly regulated and any international franchisor will need to very carefully consider the legal requirements to ensure continuing compliance with the regulatory regime enforced by federal laws operating in all the states and territories of Australia.
The Franchising Code of Conduct is the regulatory code that governs the operation of franchising in Australia. There are also many laws that are specific to Australia which international franchisors should be aware of, for example, federal and state taxation; consumer laws; employment laws, particularly in light of fair work laws; occupational health and safety; data collection; and privacy.
Additionally, there may be other specific regulations that apply to certain industries. An understanding of these different laws will help guide the franchisor’s operation of the franchise network. Therefore, international franchisors need to be prepared to invest in the appropriate professional advice to ensure regulatory compliance with Australia’s laws.
KM: Why should international franchisors seek Australian legal assistance?
RM: International franchisors need to understand the Australian market, in particular customer behaviors and habits, and the legal and commercial landscape.
A market entry analysis is invaluable for any international franchisor to understand the unique Australian market, as what works in one location may not necessarily work in another. Australia is a geographically vast and diverse destination for international franchisors.