Competition Minister Andrew Leigh is urging Australian franchisors to put their standard franchise agreements online, saying openness would help attract new small business owners.
He will make the pitch in an address to the Franchise Council of Australia, asking brands to make better use of the government’s Franchise Disclosure Register.
Thousands of franchisors already list set-up costs, ongoing payments and contract lengths there, but few include their standard form contracts.
Leigh argues prospective franchisees should be able to compare contracts while they are still weighing up businesses, rather than after months chasing one deal. He says transparency would expose poor deals and push franchisors to compete on fairness.
He will also back unfair contract term protections for all franchisees, including those who grow beyond the small business thresholds. In some US states, such as California, Wisconsin and Minnesota, proposed franchise agreements can already be read online.
What it means for your money
If you’re thinking of buying into a franchise, check the Franchise Disclosure Register for the costs, payments and contract length before you spend money on legal advice. Compare several brands, and still have a lawyer review the agreement before you sign.
Source: SmartCompany