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Franchise Operating Agreement Template for Australia

A comprehensive legal agreement governed by Australian law that establishes and regulates the relationship between a franchisor and franchisee. The document outlines the terms and conditions under which the franchisee is granted the right to operate a business using the franchisor's system, trademarks, and intellectual property. It complies with the Australian Franchising Code of Conduct and includes detailed provisions for operations, fees, obligations, training, territory rights, quality standards, and termination procedures.

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What is a Franchise Operating Agreement?

The Franchise Operating Agreement serves as the foundational legal document for franchise businesses operating in Australia. This agreement is essential when a business owner (franchisor) grants another party (franchisee) the right to operate under their established business system and brand. The document must comply with the Australian Franchising Code of Conduct and related legislation, including the Competition and Consumer Act 2010. It covers all aspects of the franchise relationship, from initial setup to termination, including detailed operational requirements, fee structures, training obligations, and quality standards. The agreement is typically used after the parties have completed the disclosure process and decided to proceed with the franchise relationship.

What sections should be included in a Franchise Operating Agreement?

1. Parties: Identifies and provides full details of the franchisor and franchisee

2. Background: Describes the franchise system, business concept, and context of the agreement

3. Definitions and Interpretation: Defines key terms used throughout the agreement and interpretation rules

4. Grant of Franchise: Details the rights being granted to the franchisee and territory specifications

5. Term and Renewal: Specifies initial term duration and conditions for renewal

6. Franchise Fees and Payments: Outlines all fees, royalties, and payment terms

7. Franchisor Obligations: Lists all obligations and commitments of the franchisor

8. Franchisee Obligations: Details all requirements and responsibilities of the franchisee

9. Training and Support: Specifies initial and ongoing training requirements and support services

10. Intellectual Property: Covers usage rights for trademarks, systems, and proprietary information

11. Marketing and Advertising: Details marketing requirements, contributions, and protocols

12. Operations Standards: Establishes required operational procedures and quality standards

13. Records and Reporting: Specifies record-keeping requirements and reporting obligations

14. Insurance and Indemnity: Details required insurance coverage and indemnification provisions

15. Default and Termination: Outlines breach conditions, remedies, and termination procedures

16. Post-Termination Obligations: Specifies obligations and restrictions after agreement ends

17. Dispute Resolution: Details procedures for handling disputes between parties

18. General Provisions: Includes standard legal provisions like governing law, notices, and amendments

What sections are optional to include in a Franchise Operating Agreement?

1. Equipment and Inventory Requirements: Used when specific equipment or inventory levels must be maintained

2. Real Estate Requirements: Include when premises must meet specific requirements or locations

3. Computer Systems: Used when specific POS or management systems are required

4. Employee Requirements: Include when there are specific staffing or training requirements

5. Environmental Requirements: Used for franchises with specific environmental compliance needs

6. Catering or Delivery Services: Include for food service franchises offering these services

7. Online Operations: Used when online sales or presence is part of the franchise

8. Multiple Unit Operations: Include when franchisee may operate multiple locations

What schedules should be included in a Franchise Operating Agreement?

1. Schedule 1 - Territory Description: Detailed description and/or maps of the franchise territory

2. Schedule 2 - Initial Franchise Fee and Other Charges: Comprehensive breakdown of all fees and payment structures

3. Schedule 3 - Operations Manual Summary: Overview of the operations manual contents and updates process

4. Schedule 4 - Initial Training Program: Details of required initial training and assessment criteria

5. Schedule 5 - Approved Products and Services: List of authorized products/services and suppliers

6. Schedule 6 - Brand Standards: Detailed specifications for use of trademarks and brand elements

7. Schedule 7 - Required Equipment and Specifications: Detailed list of required equipment and maintenance standards

8. Schedule 8 - Premises Requirements: Specifications for location, design, and fit-out requirements

9. Schedule 9 - Initial Inventory Requirements: Minimum inventory levels and approved suppliers

10. Appendix A - Disclosure Document: Mandatory disclosure document as per Franchising Code of Conduct

11. Appendix B - Deed of Confidentiality: Confidentiality agreements for franchisee and key employees

12. Appendix C - Personal Guarantees: Guarantee forms for franchisee principals

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok˰ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Australia

Publisher

tiktok˰

Document Type

Operating Agreement

Cost

Free to use

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