Understanding of basic Business law is important in many business transaction. In matters involved in business law, we provide non-litigious services in relation to
• Franchise Agreements
• Breach of Contract
• Preparation of commercial documentation
• Shareholders Agreements
• Partnership Agreements
• Supply agreements
• Loan agreements and guarantees
• Distribution agreements
• Employment contracts
• Winding up and open companies
• Joint Ventures
• Company Constitutions
• Intellectual Property matters
• Restrictive covenants
• Licence agreements
PURCHASING A BUSINESS
Before making decision on buying a business we advise our clients basically on following matters because we understand commonly those matters lead to legal disputes. These matters may not be relevant to each and every business but generally most of the businesses have common issues to be addressed. It is advisable you to discuss the matters with a competent lawyer and competent accountant. Franchise business is very common in Australia. We advise our clients on potential disputes in relation to the matters but not limited to:
• Inventory of the business that you are interested.
• Furniture, fixtures, equipment and building.
• Copies of all contracts and legal documents such as lessees, purchase
• Agreements, distribution agreements, subcontractor agreements, sales contracts, union contracts, employment agreements and any other instruments used to legally bind the business.
• Tax returns for the past five years.
• Financial statements for the past three years.
• Sales records.
• Complete list of liabilities.
• All accounts receivable.
• All accounts payable.
• Debt disclosure.
• Customer patterns.
• Advertising costs.
• Price checks.
• Industry and market history.
• Location and market area.
• Reputation of the business.
• Seller-customer ties.
• Inflated salaries.
• List of current employees and organizational chart.
• Product liability.
DISPUTES IN CONTRACTS MAY OCCUR:
Breach of contract
A breach of contract occurs when a party fails to do what they have promised to do. This happens for many different reasons. For example, a party may misunderstand their obligations, they may no longer have capacity to perform, or they may no longer be willing to perform.
It is the last recourse but we advise our client if and when necessary to obtain a legal remedy from the court upholding our clients’ rights. When one party breaches a contract, the other party may ask a court to provide a remedy for the breach. The court may order the breaching party to pay money to the non-breaching party. This remedy is called damages. Alternatively, the court may order the party to do what they promised to do under the contract. This remedy is called specific performance.
Damages based on Loss
Damages are the normal remedy for breach of contract. In Australian law, the amount of damages is the loss caused by the other party’s breach. In most circumstances, the court will order the party in breach to pay the sum of money needed to place the non-breaching party in the same situation as if the contract had been performed.
Market value is not always decisive when determining the amount of damages which a court may award for breach of contract. For example, if a builder constructs a house which does not conform to the contract, the landowner is usually entitled to damages sufficient to pay for repairs or rebuilding to comply with the contract standards even if there is no difference in the value of the two houses. Damages calculated on the basis of market value would not put the innocent party in the same position as if the contract had been performed.
WHAT IS FRANCHISING?
Franchising is a business relationship in which the franchisor (the owner of the business providing the product or service) assigns to independent people (the franchisees) the right to market and distribute the franchisor’s goods or service, and to use the business name for a fixed period of time. The franchisor supports franchisee by providing leadership, guidance, training and assistance. The Franchisor charges service fees in addition to setting up fee. What we advise our clients to:
• Read, understand and ask questions about the disclosure document.
• Understand about an inaccurate or incomplete interpretation of the franchise agreement and other legal documents to be signed.
• Seek legal advice.
• Verify the reality of oral representations of the franchisor.
• Contact other franchisees who are on the same franchisor.
• Make sure if you have enough working capital.
• Meet the franchisor’s key management personnel and representative assigned to your territory.
• Consider your contractual rights on Waiver of Significant Legal Rights
• Existence of and Restrictions upon a Franchisee Association
• Understand negotiability or are you entering into “Standard Form” Contracts
• Think of business Competence of the Franchisor and organisational skills
• Re-consider restrictions on Product or Services
• Double check restrictions on Transferability of Ownership
• Territorial Encroachment by others