The Franchising Code defines "
Franchise Agreement" as an agreement:
a. That takes the form, in whole or part, of any of the following:
i. a written agreement
ii. an oral agreement
iii. an implied agreement
b. In which a person (the franchisor) grants to another person (the franchise owner) the right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan substantially determined, controlled or suggested by the franchisor or an associate of the franchisor, and
c. Under which the operation of the business will be substantially or materially associated with a trade mark, advertising or a commercial symbol:
i. owned, used or licensed by the franchisor or an associate of the franchisor, or
ii. specified by the franchisor or an associate or the franchisor, and
d. Under which, before starting business or continuing the business, the franchise owner must pay or agree to pay to the franchisor or an associate of the franchisor an amount including for example:
i. an initial capital investment fee
ii. a payment for goods or services
iii. a fee based on a percentage of gross or net income whether or not called a royalty or franchise service fee
iv. a training fee or training school fee but excluding:
v. payment for goods and services at or below their usual wholesale price
vi. repayment by the franchise owner of a loan from the franchisor
vii. payment of the usual wholesale price for goods taken on consignment
viii. payment of market value for purchase or lease of real property, fixtures, equipment or supplies needed to start business or to continue business under the franchise agreement
The following relationships are specifically excluded from the definition of "franchise agreement":
a. Employer and employee
b. Partnership
c. Landlord and tenant
d. Mortgagor and mortgagee
e. Lender and borrower
f. The relationship between the members of a cooperative registered, incorporated or formed under Australian State and Federal Cooperatives legislation.
This article appears courtesy of
Mason Sier Turnbull,
franchise lawyers.
10-Sep-2007