Not Holding Leases for Franchised Stores? Think Again!

The new Franchising Code of Conduct took effect on 1 January 2015. And, it means big changes for franchisors and franchisees!

In particular, the operation of restraint of trade clauses has been significantly curtailed. This week on You Legal TV, find out what those changes are and how to best continue to protect your interests.

See below for the complete transcript of this episode -

On the first of January 2015, the new franchising code of conduct took effect. There are a number of important changes in the code, and new civil penalties apply, so it's important to familiarize yourself with these changes.

One significant aspect of the new code is the curtailed operation of restraint of trade clauses.

Restraint of trade clauses in agreements entered into on or after the first of January 2015 was ineffective in a number of situations.

The policy reasoning behind this is to compensate franchisees who may have spent long years building up a business and, in turn, the franchisor's reputation, only to be left with nothing at the end of the relationship.

However, without an effective restraint of trade clause at the end of a relationship, a franchisor may be forced to buy the business back to prevent the franchisee from continuing to run it.

One way to combat this is for the franchisor to hold the lease for franchised premises. This can also increase the value and desirability of the franchisor's business should they decide to sell it.

So, if you're concerned about your business interest being adequately protected or you want to familiarize yourself with the possible impact of the new franchising code of conduct, You Legal are here to help.

What Should I Do Next?

Contact us if you would like further legal advice on Franchising. The lawyers at You Legal will be happy to assist you in any way we can.

* This blog is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.