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VIC Consequences of Breaking an Overseas Franchise Agreement?

Discussion in 'Commercial Law Forum' started by willt99, 27 December 2016.

  1. willt99

    willt99 Member

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    Hey all,

    I hope your Christmas was enjoyable! I have a bit of an odd question that I need some basic guidelines on (I know this isn't proper legal advice!).

    Someone I know from overseas (specifically in Europe) is assisting me with some business strategies in eCommerce and starting an online store in a particular market. I wouldn't call them overly creative or incredibly unique strategies, however I'd say that they will help me and save me time.

    Now, this individual is requesting that if they help me, in addition to an initial fee that I will pay them, I must surrender a significant 50% of future sales profit for a set few years. He has written up a " franchise agreement" outlining that I must transfer this amount and supply sales reports etc.

    In all honesty, I tried negotiating a better rate but he is aware that I want his help and this has meant it won't change. I don't believe that the rate is representative of the effort he will be placing in it (which will last about 30 days in guiding me), and it'd probably cause me big issues with margins down the track (but it's still worth having this advice than not).

    The agreement is (to me at least) relatively poorly written in that it doesn't really define a jurisdiction, arbitration, mediation etc between our two countries (me being in Aus). Maybe that doesn't matter, I don't know. But ultimately...morals aside, I'm willing to give the guy his % for a while or at least until his efforts are no longer related to my work (I'd be happier long term for the length of the contract if it were less %!)

    My question is, would such a contract be potentially quite dangerous in terms of consequences if eventually ignored or broken? Can it be easily chased cross-border?

    Thanks :)
     
  2. Iamthelaw

    Iamthelaw Well-Known Member

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    Yes, he could bring an action for breach of contract

    Yes, it can.

    From a purely commercial stand point you say that the strategies he's providing you aren't 'creative and unique' and that the'll help you 'save time' - Yet you're willing to give up 50% of all future profits? You should re-think that.
     
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  3. Tim W

    Tim W Lawyer

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    With all courtesy, you are out of your depth.
    Don't sign anything before getting proper legal advice
    from a lawyer who has experience in multi-jurisdictional e-commerce.
     
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