Franchisors need to protect their business from ex-franchisees, for their own sake and for the sake of their other franchisees. Restraining ex-franchisees from competing with the franchise is not straight forward. The question I often get asked is, are they ever enforceable?
The answer is yes, but you really do need a carefully crafted contract. The courts won’t enforce a restraint unless they are convinced it is reasonable. What is reasonable depends on the circumstances of your business and the particular franchise.
There is no hard and fast rule. However, you can go a long way by applying the principles from past court cases and complying with the Franchising Code of Conduct.
So, here are our 9 Top Tips for creating enforceable restraints against franchisees:
When was the last time you had your franchise documents comprehensively reviewed and updated? Maybe it’s time to have a chat with me about how I can help set you and your business up for success and avoid costly and unnecessary disputes.
About the Author:
Steve Milicevic, owner of Milicevic Lawyers, specialises in Franchising and Commercial Law. Feel free to get in touch with him at:
P: 1300 55 88 03