There are certain documents that the Franchisor must provide to the Franchisee at least 14 days before the Franchisee sign the franchise agreement or make any non-refundable payment:
· an information statement;
· a copy of the Franchising Code;
· a disclosure document; and
· the franchise agreement in its final form.
We will be able to review the documents and to ensure that these requirements have been complied by the Franchisor. Most importantly, we will also suggest that financials of the Franchisor are also obtained and reviewed by your accountant or financial planner prior to signing the Franchise Agreement.
It is always important to obtain legal advice and to ensure that you understand your rights and obligations under the Franchise Agreement.
Within seven (7) days of entering into the Franchise Agreement or making a payment under the agreement, the Franchisee is entitled to terminate the Franchise Agreement. This cooling-off period only applies to a new Franchise Agreement, not a renewal, extension, or transfer of the Franchise Agreement.
If the Franchisee terminates the agreement, the Franchisee is entitled to a refund of payments (if any) and the franchisor must provide the refund within 14 days. However, the Franchisor can deduct its reasonable expenses from this amount if the expenses, or the method of calculating such expenses, has been set out in the franchise agreement.
As a Franchisee, when you buy, sell, transfer or terminate a franchise, taxes may apply, including capital gains tax (CGT) and goods and services tax (GST). Please consult your accountant in this regard.
This area of law is often complicated and involves reviewing the documents in great detail. Contact us today for us to assist with your franchise.