Franchise law, along with many other laws, comes with a series of codes. The purpose of the franchise law is to control the conduct of participants in franchising towards others in franchising.
Throughout my essay I will indulge deep into the franchise law, explore various different codes and summarise with my own thoughts. So what is franchising? The basic meaning of franchising is the practice of using one firms’ successful business form. An example of this would be you typical McDonalds franchise restaurant. For the Franchisor, the franchise is an exchange in order to build chain stores per say. This is done in order to distribute goods and avoid investment and liability over the chain. The franchisee is said to obtain slightly more incentives or benefits to that of the franchisor, this is due to their direct stake of the business.
Several codes contain associates. An associate for a franchisor is any director or related body corporate. The associate has great involvement, they directly/indirectly own, control, or hold with power to vote. In most cases the voting percent sits at around 15. So that’s 15% of the issued voting shares in the franchise. An associate also works as a partner of the franchisor. There relationship is complicated, it is relevant to the franchise system which includes supplying goods, property or service to a franchise. They are also bound by disclosure; however in-depth meaning and understanding of disclosure will be bought about later in the essay.
The difference between a franchisor and a franchisee is sometime mistaken. They are very similar. A franchisee is a person to whom a franchise is granted, whereas a franchisor is a person who grants the franchise. Both the franchisee and franchisor are in relation with the sub-franchisee or sub-franchisor. Throughout my research I have notice that sub-franchising is often a term that is misunderstood and is frequently confused with other franchise structures. A sub-franchisor is...