The franchising suite of documents prepared will vary from lawyer to lawyer. Generally the franchisor will be provided with the:
When disclosure is given to the franchisee it must be provided with the documents the franchisor requires the franchisee to sign.
Once the franchise agreement has been signed the franchisee has 7 days within which to cancel the franchise agreement. If the franchisee chooses to cancel the franchise agreement within that 7 day “cooling off period” the franchisor must return the funds paid by the franchisee less any monies the franchisor disclosed would be retained by the franchisor in such a case.
No franchise agreement can be a “one size fits all”. Franchise businesses vary too greatly for one franchise agreement to fit all kinds of franchised businesses. Franchised businesses can be for retail stores and mobile businesses. The retail stores can be restaurants, takeaways, in store dining, clothing, pet products and the list is endless. The mobile franchised businesses can be, for example, car care and maintenance and pet care. The franchisor’s requirements in relation to the franchised business vary greatly from franchisor to franchisor. Therefore, the franchise agreement has to be tailor made to the business type and the franchisor requirements.
The franchisee is required to complete a questionnaire or simply disclose any representations which it has relied upon in deciding to enter into the franchise agreement.If the franchisee specifies it has relied upon some representations made by the franchisor or its representatives in deciding to enter into the franchise agreement the franchisor will need to clarify if that representation has been made.
If a representation has been made at the beginning of the franchise process and that representation has been made without basis and is untrue then the franchisee may have a claim against the franchisor for misleading and deceptive conduct.
It is so important for the franchisor to be able to ascertain this before going further with the franchise relationship.
This is effectively a requirement under the Franchising Code of Conduct whereby the franchisee and guarantor acknowledge they have received the documents and had a chance to read and understand them. It will also state the franchisee has been told to receive legal, accounting and business advice and whether or not they have chosen to receive that advice.
This allows the franchisor to complete any blanks which have necessarily been left in the franchise or other documents. For example if the franchise agreement is signed before a start date for the business this date can be completed once the franchised business is ready to commence.
This is generally signed when the franchisor and franchisee commence negotiations or prior to giving the franchisee information about the franchise system and business.
The procedure which is generally followed is as follows:
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