Answer To: ANSWER this question. there are three parts to this question. The word count is XXXXXXXXXXwords...
Bhavna answered on Jun 23 2021
Runninga Business
· Business Structure:
Franchises are special form of business model. It is an agreement between two parties where one party allows the other party the right to carry on the business under a retail or commercial plan that is controlled by the other party. The business is substantially or objectively associated with specific Trademark or commercial symbol. The franchise business structure offers would-be business owners the best of both worlds, they get to be their own boss with the support of proven, well-known brand. There is a heavy power inequality in the association between the Franchisors and Franchisees. The Franchisees are required to pay a fee to the authorised party before starting the business. The parties to franchise agreement must follow the rules in Franchising Code of Conduct. The Code of Conduct defines certain rights and responsibilities for Franchisors and Franchisees. These Laws and Restrictions ensure the quality of the product and service is maintained and leads to the higher chance of success for the Franchisee. Franchisors and Franchisees may also be legally forced to meet other section of regulation like The Fair Work Act, Australia’s Tax Laws, and State and Territory Licensing Schemes. The common examples of Franchises in Australia include fast-food restaurants, grocery stores, familiar services, etc.
In 1970s American fast-food retailers were responsible for the rise of Franchising in Australia. Now, franchising isa important and growing enterprise sector across most industries, specially retail. While it began with franchisors in the foreign land, 90% of the franchise opportunities in Australia are now familiar. And franchising has even allowed a number of Australian businesses to take their business abroad. Like any business decision, one should study the franchising carefully and follow the right practices. The franchisee will not have same level of control compared to business he would run separately. Buying a franchise means purchasing the freedom to run a business under an already successful branding image. Also these freedom are restricted to situations that are included in franchise agreement. So a Franchisee should understand the contract so that he can negotiate the contract that work for him. So he should make sure that he understand what he is agreeing to. While the Australian Consumer Law offer safety against unfair agreement condition, which means one must not use misleading, fraudulent or unfair conduct in its business dealings; but it is advisable to say ‘no’ if a franchisee feel pressured by sales person. All franchises systems engaging employees must provide workers compensation cover and may be accountable to state payroll tax. They must reduce and pay the employee income tax and the superannuation contributions.
Under code of conduct Franchisee has different number of rights-
1. The Franchisor must provide the Franchisee with an information report defining some key advantages and dangers of franchise system along with the copy of Franchise agreement and Code of conduct.
2. The Franchisor is also required to provide Franchisee with the acknowledgement document defining the information about early and ongoing fees that he is required to pay to the Franchisor, marketing costs, fit-out costs and supporting cost relating to the lease.
3. Franchisors are required to define what right Franchisees will have at the end of the initial term in the acknowledgement document.
4. Franchisor must also provide contact details for the present and previous franchisees.
Besides, the Franchisees and Franchisors are legally required to act with loyalty, which means, to work together with each other and act honestly and not irresponsibly in their dealings. However, the loyalty does not oblige the Franchisor to act unavoidably in the interest of Franchisee, hardly does it prevent the Franchisor from acting in its own monetary interest.
If the Franchisee believe that his rights have been violated, there are number of ways he can reply-
1. In accordance with the guidelines, the member of the franchise can write to the other member (Franchisor and Franchisee) explaining the nature of dispute and what settlement they are hoping to achieve. Both the members should work jointly to settle the dispute.
2. If the Franchisor and Franchisee are unable to solve the issues within three weeks, the Franchisee may look into the subject to Mediation. Attendance at Mediation is compulsory for both the members.
3. The Australian Competition and Consumer Commission(ACCC) is the governing body responsible for forcing the Code and inspecting assumed violations. So the Franchisee can lodge a complaint with the ACCC, they may choose to inspect the matter, and may choose to take further action if it considers that there has been any violation of the code.
4. Finally, the Franchisee may choose to take independent or individual legal action either under the guideline, or to look for other legal ...