Becoming a Franchised Business
Tom and Anna operated a successful cleaning business. They did not want to miss the opportunity to take on more contracts to clean offices, but had limited resources (capital and human) to do so. Despite this, they remained determined to grow and expand their brand and company, and began exploring the different options. They ultimately decided to turn their business into a franchised business. The pair approached Tang Legal to advise and assist them towards achieving this end.
Tang Legal advised that:
- There is a mandatory franchising code which must be complied with by franchisors within Australia. Failure to comply will have severe implications.
- The most valuable assets of a business are its intellectual property- encompassing know-how, the unique brand and business system, and so on. These are intangible assets, and must be protected.
- A major factor contributing towards the success of a franchised business is its ability to select the right candidate as franchisee.
A franchise structure was established for their business, whereby:
- The intellectual property of the business was registered with the relevant authorities and protected via appropriate legal structures being established.
- Multiple levels of entities were established and their sources of revenue were increased. The implemented structure gave Tom and Anna the flexibility to expand quickly, yet also to take control if any of the entities ran into troubles.
- Formal agreements and documentations that comply with the franchising code were prepared.
Tom and Anna took full advantage of the established franchise structure and continued to expand their business. As a result, they are currently operating their franchise across several Australian states.