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What is a franchise?

Wednesday, 30 March 2016

According to the Franchising Code of Conduct, a business is deemed to be a franchise where:

  • There is a written, oral or implied agreement;
  • One party (the franchisee) is granted the right to carry on a business of offering, supplying or distributing goods or services under a system or marketing plan;
  • The system or marketing plan is substantially determined, controlled or suggested by the other party (the franchisor);
  • The operation of the business will be substantially or materially associated with the franchisors trademark, advertising or commercial symbol; and
  • Before starting or continuing the business the franchisee must pay or agree to pay the franchisor an amount, whether an initial fee, ongoing royalty or other payment.

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