The franchisor compliance manual

Key terms

Associate (of a franchisor)—a person:

(a) who:

(i) is a partner, director or related body corporate of the franchisor, or a director of a related body corporate or

(ii) for a franchisor that is a proprietary company—directly or indirectly owns, controls, or holds with power to vote, at least 15 per cent of the issued voting shares in the franchisor and

(b) whose relationship with the franchisor is relevant to the franchise system, including because they:

(i) supply goods or services to a franchisee

(ii) give the franchisee a right to occupy premises

(iii) own intellectual property used in the franchise system or

(iv) are involved in business development of the franchise system (e.g. market research and development, sales promotion or management).

Extend—when the term of a franchise agreement is extended (other than because of renewal) or when there has been a material change to:

  • the terms and conditions of the agreement or
  • the rights or liabilities under or in relation to the agreement.

Franchisee—a person to whom a franchise is granted or otherwise participates in a franchise as a franchisee.

Franchisor—a person who grants a franchise or who otherwise participates in a franchise as a franchisor.

Master franchise—a type of franchise system where the ‘master franchisor’ grants to another party (the sub-franchisor) control over the franchising activities in an area. The sub-franchisor then enters into franchise agreements with individual franchisees (sub-franchisees).

Prospective franchisee—a person who deals with a franchisor for the right to be granted a franchise.

Renew—when the franchisee exercises an option during the term of the agreement to renew the agreement.

Restraint of trade—a restriction on the ability of a franchisee to operate a similar business to the franchise after their franchise agreement has come to an end.

Transfer—includes:

  • a franchisor entering into a new franchise agreement with a prospective transferee and terminating the existing agreement
  • a franchisee’s rights and obligations under a franchise agreement being assigned to a prospective transferee
  • any other transfer circumstances contemplated by a franchise agreement.

Varied—any change to a franchise agreement.

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