Are you a franchisee navigating COVID-19?

Apr 14, 2020

As Victoria adapts to Stage 3 Covid-19 restrictions, as a franchisee you can protect yourself and your business in the current circumstances by understanding your rights and obligations, arming yourself with information and engaging in open and honest communication with your Franchisor.

Understand your rights and obligations

Your rights and obligations as a Franchisee are determined by both your Franchise Agreement and the applicable laws, including the Franchising Code of Conduct. It’s now more important than ever that you are aware of, and that you understand those rights and also, your corresponding obligations.

In particular, the Franchising Code of Conduct provides that each party to a franchise agreement must act in good faith towards the other. In the uncertain times surrounding COVID-19, this likely means that parties should not act arbitrarily in decision making (for example, when dealing with disputes or when considering whether to terminate a franchise agreement) and that where possible, the parties should cooperate in order to achieve the purpose of the Agreement.

Arm yourself with information

If you have not already done so, you should review the financial health of your franchise.

In doing so, you will likely inform your commercial decision-making going forward. Significantly, you can use that information to demonstrate that you have taken all reasonable steps in the current circumstances, and that the franchise would otherwise be in good financial health. Both franchisee and franchisor should work together in forward planning for the business.

Communicate

Finally, remember that the success of a franchised business is ultimately linked with the success of the franchisor, and vice versa.

Now is the time to engage with your respective franchisees and franchisors. This includes reaching out, and making compromises where you can. Both parties may have to make concessions, but the ultimate goal should be to achieve a successful outcome for all.

If you have any questions or concerns about your rights, need advice in relation to your Franchise Agreement or assistance to communicate with your franchisor or franchisee, our Commercial Team is here to help.