Terminating a franchise agreement can have significant consequences.
Economic conditions in Australia remain challenging, placing pressure on both franchisees and franchisors.
According to IBIS1, while the COVID pandemic hampered the performance of franchised businesses over 2020 and 2021, post-pandemic conditions have continued to be difficult. In particular, interest rate rises have caused spending on franchised goods and services to decrease.
While franchise agreements will generally contain post termination provisions designed to protect the franchisor's brand, data suggests that replacing a franchisee may not be a simple process.
Recent figures cited in the Independent Review of the Franchising Code of Conduct indicate that from 2014 to 2023 the number of franchisees in Australia declined by approximately 5.2%.
Additionally, post termination provisions contained in a franchise agreement may negatively impact the franchisee if the franchisee wishes to operate an independent business.
What Happens When a Franchise Agreement is Terminated?
What are the Consequences for a Franchisee when a Franchise Agreement is Terminated?
What are the Consequences for a Franchisor when a Franchise Agreement is Terminated?