As noted by my colleague Catherine Sedgley in her summary, the Parliamentary Joint Committee on Corporations and Financial Services (“Committee”) recently issued its long-awaited Report on the operation and
Too often, Coleman Greig sees franchisees bypass the vital task of conducting their own due diligence prior to buying a franchise on the basis that it is too expensive, or that it delays the sign-up process. Instead of viewing due diligence as an expense to the business, franchisees should view the process as an investment, as it provides critical knowledge required to make calculated decisions.
It’s that time of year again, where many of us start to wind down (or in some cases, wind up prior to the Christmas deadlines) and start thinking about whether our house is in order. As such, Coleman Greig would like to remind you of some of the common pitfalls that we often see in our leasing practice, particularly within the world of franchising.
With the current climate, the terms ‘franchising’ and ‘franchise’ can often leave a bad taste in one’s mouth. As such, business owners looking to either expand or leverage a successful business in order to achieve further growth will often explore alternative models, such as licensing. While ‘franchising’ and ‘licensing’ may mistakenly be used interchangeably, they are two distinctly different concepts.
It is difficult to ignore the immense amount of press surrounding the recent parliamentary enquiry into the franchising sector and the effectiveness of the Franchising Code of Conduct. The Senate Committee, chaired by Michael Sukkar, has set themselves the task of discovering whether amendments to the Code would result in a more cohesive sector and provide greater support to franchisees.
Under the Franchising Code of Conduct, a Franchisor is required to update their Disclosure Document annually, within 4 months following the end of the financial year. If your financial year ends 30 June, the Disclosure Document for your franchise network needs to be updated on or before 31 October 2018.
As of 1 January 2019, the Australian Accounting Standards Board (AASB) will introduce a new leasing standard requiring Australian businesses to bring operating leases onto their balance sheets.
A parliamentary inquiry into franchising and the effectiveness of the Franchising Code is underway, with hearings being conducted with a view to getting a report to the Parliamentary Joint Committee on Corporations and Financial Services by 30 September 2018.
Various issues can be overlooked in the rush to have a document signed and finalised, and because of a landlord’s pressure to have a standard document for a complex or centre. Such omissions may have an adverse impact on the retailer tenant.
In theory, recruiting a new franchisee should be a relatively simple endeavour – however the reality is that there are a number of pitfalls to face if you, as a franchisor, don’t have the proper systems and checks in place to assist in the recruitment of franchisees for your network.
Are you ready to grow your business, but you’re not sure whether to look towards licensing or franchising? Peter Stewart takes a look at the pros and cons of both options.
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