What new franchises need to look out for

According to LAC Lawyers , starting a new business can be a daunting operation. A remarkably high percentage of small businesses fail within the first five years of operation. Sometimes that is because the business itself is not sound. However, on other occasions the problem lies in a lack of planning or an ignorance of the many legal requirements that must be met by the small business operator.

One of the first things you need to find out when you're starting out is what laws apply to your new business. You may wish to consult a legal professional to help you with all the legal requirements that you must comply with, such as licences, registrations, contracts and leases.

In addition to these requirements, you may also encounter issues related to contracts, employment, fair trading, leases, insurance, credit and debt recovery, finance and taxation. All small businesses should also be careful to ensure that they comply with all relevant employment law, and also laws and rules that related to occupational health and safety.

When you’re starting any business there are many issues to consider. People intending to use their home as a place of business often have to comply with particular state, territory and local government regulations. These regulations often address the impact your business activities may have on the surrounding area (e.g. pollution, energy use or parking).

If you plan to buy an existing business, carefully analyse both the advantages and disadvantages. One advantage is that a good business history can increase the likelihood of a successful operation and ensure that finance is easier to obtain. Potential disadvantages can be overestimating the value of goodwill figure and a poor public image inherited from the previous owner.

Often those people considering a small business may become a franchisee. Buying a franchise can mean a significant financial investment, so its important to have all the relevant facts before you enter into a franchise agreement.

The Franchising Code of Conduct helps you to make more informed decisions by requiring franchisors to disclose specific information and to follow rules in their dealings with you.

Starting a new business may also mean establishing a company. A company or corporation is a separate legal entity or person. It can enter into agreements in its own name. This generally means that the owner of a business is not liable for fulfilling the company’s contractual obligations. However, in some cases (such as leases), the contracting party may seek a personal guarantee from the owner of the company in the event that the company is unable to meet its obligations under the agreement.

Access more information about buying a franchise and running a franchise.