Franchisees should not solely rely on their franchisors for advice on job classification levels in awards, as a Hungry Jack's franchisee recently discovered. This is the key message from the widely reported decision of Fair Work Ombudsman (FWO) v Chamdale Pty Ltd. The case highlights the complexity of award interpretation and the risks associated with franchisees attempting to delegate that responsibility to others. Award Interpretation Wage rates are determined by the employee’s job classification level in awards (e.g. Fast Food Employee Level 1, 2 and 3). Classification levels...

Plato’s Parable of the Cave Plato in The Republic uses an allegory about a group of people who are chained in a cave. From their position to the fire inside the cave and a wall behind them, they each see shadows from outside reflected on the cave wall. Plato argues that all people are similar in that we cannot see reality but only shadows.  We seldom see the reality outside the cave. For Plato, philosophy was the pathway to remove the chains and get outside the cave to view reality and find truth. Willful Blindness In some cases, even people not chained to the cave wall...

Blogger: Eugene Clark As I write the blog, Halloween is only a few days away and it is an appropriate time of the year to consider the potential ‘tricks and treats’ associated with cloud computing—something which many organisations are considering moving to or ramping up as they make their plans for the year ahead. Information communication technology is today a vital component of all successful organisations, including franchises. Technology also represents a major cost. Franchise organisations, in common with most organisations around the world, are increasingly...

Blogger: Professor Eugene Clark, Griffith Business School, Griffith University In both Law and Business some of the best ideas come from harvesting good ideas from elsewhere. In business, someone sees a successful business in one country and gains the franchise rights to develop it in another country. In the case of governments, laws from one country are sometimes copied and adapted for use in another country, an example being the adoption of the Australian Torrens Registration system by several countries. On August 4, the Australian government released its National Alliance...

Restraint of Trade clauses can be commonly found in not only franchise agreements, but in sale of business and employment agreements. Such clauses are only valid and enforceable where the restraint is reasonable. The courts generally take a stricter and less favourable view of restraints of trade in employer – employee contracts than those in vendor – purchaser contracts. One of the reasons for doing so is that ‘by agreeing to a restraint on further employment, an employee may be, wholly or partially, giving up his or her ability to work after the present employment...

The final 'key intellectual property (IP) issue for franchises' is confidentiality agreements. Franchise relationships involve the use of various IP that provides the franchise with a competitive edge and would be described as ‘confidential information’ – such as trade secrets, confidential processes, commercially valuable business systems and procedures. The majority of this IP would be protected by common law or patent and copyright laws; however, not all of it would be considered to be truly ‘confidential’ or a ‘trade secret’ under...

The next ‘Key Intellectual Property Issue for Franchises’ is protection of image and appearance (after trademark protection and business name registration). In addition to trademarks and business names, the general image and appearance of franchises also needs to be protected. Whilst some of these aspects may be protected through trademarks, it is unlikely that protection will extend to colour schemes, layout, furnishing and signage that help to create a visual appearance and image of the franchise business. The example provided by LexisNexus franchising law and...

After trademark protection the next ‘Key Intellectual Property Issue for Franchises’ is registration of business names. It must be remembered by both the franchisee and franchisor that the registration of a business name provides no intellectual property protection. Unlike the Trade Marks Act 1995, legislation governing the registration of a business name is state-based (although moving towards a national registration process in the future). In Queensland, the relevant legislation is the Business Names Act 1962 (Qld). Section 5 of this Act states that: A person...

The second post in my series on ‘Key Intellectual Property Issues for Franchisors and Franchisees’ looks at trademark protection. A franchisor must have registered trademark protection for their central trading name and trademark (or brand). The exclusive use of the trading name and trademarks constitute the core value of the franchise offer. The franchisee is entitled to believe that no other person (apart from other franchisees) will be able to trade under the same or a similar name or trademark without risking court action. Any crucial sub-names or trademarks should also...

Intellectual property rights are an essential part of all franchise agreements, and contain licences of intellectual property rights (IPRs) in relation to trade names; trademarks; image; reputation; exclusive manufacturing or selling rights; and goodwill. Ways in which to use intellectual property rights and their protection against misuse are among the most important concerns of the franchisor. Therefore, before commencing a franchising relationship, a prospective franchisor must ensure that all the relevant intellectual property associated with the business is adequately...

Rent is expensive! Although you get what you pay for regarding location within a centre and the centre itself so the investment is generally worthwhile, it will be an ongoing cost to your franchise business. It is equally important to make sure that not only the premises are right for your franchise business, but also that the lease is right. To do this, I have compiled a list of the top three tips and top two traps in leasing you should be aware of. Top three leasing tips for franchises Tip 1: Know what you are getting yourself into The best medicine is prevention, not a cure. ...

Rent is expensive, it’s true. However if you know what to look for when reading your leasing documents you may be able to save yourself some money. Below I highlight the top five most costly lease clauses you should be aware of as a franchisor or franchisee, and if you haven’t already you should also have a quick read of my, ‘Top tips and traps to getting the best deal on leasing for franchises’  blog post. 1. Rent reviews The Retail Shop Leases Act restricts the allowable rent review methods, but it does not restrict the amount by which rent may be...

Effective contracting requires a healthy, positive and productive relationship with your lawyer, and may also save you time, money and headaches down the track. In my previous post I outlined ‘Five practical tips on being actively involved in the contracting process’, here are the remaining five (out of ten) key suggestions on the topic. 6. Most contracts are compromises Seldom is a deal one sided. Thus, it can save time, money and build trust among the parties to aim for a win-win situation and not resort to sharp bargaining positions that lead to multiple drafts and...

Save time, money and problems with these practical tips for better contracting. In previous postings I wrote about general advice for better contracting and also discussed the notion of relationship contracting. One of the key relationships for effective contracting is that with one’s lawyer. Here are five (of ten) suggestions for ensuring that that relationship is a healthy, positive and productive one. Follow these tips and you will not only save time, money and problems, you will also enjoy the benefit of a successful long term relationship with your lawyer. 1. Choose the...

Franchisors, franchisees and franchise suppliers need to take their contracts out of the drawer, and proactively design and use them for relationship creation and maintenance. Hugh Collins in his book, Regulating Contracts (1999) notes years of research shows business people seldom rely on contracts. Often they find contracts expensive and irrelevant. Sound familiar? Instead, people rely on trust and other mechanisms to govern and work out their various business relationships. Collins argues that there are three components in any contract: the deal, the formal contract and the...

To be in the franchise sector, whether as franchisor or franchisee, is to engage in many forms of contracting. Unfortunately, as noted by Macaulay* many players in the franchise sector do not give adequate attention to contracting and the role it could play in developing, shaping, and managing the relationship between franchisors, franchisees and the many suppliers and others with whom they deal. Here are 12 things to keep in mind to help ensure that contracts meet your expectations and better serve your franchise business needs: 1. Seek legal advice In all but the simplest...

Post by: Craig Cameron Franchisees can no longer use preferred hours clauses to reduce overtime payments to staff. Preferred hours clauses have featured in enterprise agreements covering franchisees in retail, fast food and hospitality workplaces. Franchisees in these industries were utilizing such provisions to regulate the hours of their employees which (in many cases) reduced overtime payments. The concept is the employee elects to work different or additional hours (hours which would ordinarily trigger penalty and overtime payments) but is paid at a lower rate because the employee...