DibbsBarker franchise lawyers clarify when an agreement is considered a franchise agreement

Franchise lawyers at DibbsBarker have noted that an agreement between parties can be legally considered a franchise agreement regardless of the name given to the agreement.

A recent case in the New South Wales Court of Appeal, in the case of Alpha Centauri Enterprises Pty Ltd v Mortgage House Australia Pty Ltd has clarified this issue.

This ruling judged that it is the substance of the rights and obligations provided for in an agreement that will categorise it as a franchise agreement for the purposes of the Trade Practices Act 1974 and the Franchising Code of Conduct.

DibbsBarker franchise lawyers state that this case re-emphasises the need for parties to ensure that when structuring agreements attention is paid to the requirements that, if met, constitute a franchise agreement.

If participation in the franchising regime is to be avoided, the franchise lawyers note that care should be taken to ensure an agreement is drafted properly.

Where an agreement involves payments for goods or services, or payments of fees from one party to another within the ambit of Clause 4.1(d) of the Franchising Code of Conduct, they explain, the parties may be obligated to abide by numerous duties laid out in the Code.

DibbsBarker suggests that it would therefore be prudent for parties to ensure that any agreement, regardless of what they call it, does not involve the mandatory payment of fees or the mandatory purchase of goods or services such that it will fall within Clause 4.1(d) of the Code, if the parties wish to avoid the associated obligations of a franchise agreement.

Franchise lawyers at DibbsBarker are available to discuss these issues further, and to provide legal advice on all aspects of franchise law.