QLD Franchise Business Company - Restructuring Setup?

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DFren

Member
15 September 2014
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1
I have been in Franchise business with 40% share, and my major shareholder (60%) wants to move out and being a minor shareholder I am happy to take his 20% share and add a new partner with 40% share in the existing franchise agreement. But company wants this restructured as a new setup and I have to pay a Franchise fee, stamp duty and GST on the Franchise again which we have already paid in 2011 with my previous partner.

Please Advice

Thanks
 

Rod

Lawyer
LawConnect (LawTap) Verified
27 May 2014
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www.hutchinsonlegal.com.au
Much depends on the wording of the franchise agreement. Re-read the franchise agreement to see what is says on changing owners.
 

AnnaLJ

Well-Known Member
16 July 2014
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19
354
I agree with Rod - you need to read over the Franchise Agreement and see what restrictions (if any) are in place in terms of changing shareholding.

Out of curiosity, do you each hold your shares as individuals or do you own them jointly in an incorporated company?
 

Sarah J

Well-Known Member
16 July 2014
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2,389
Melbourne, Victoria
The reason why the company may be asking you to enter into a new agreement is because there are specific compliance rules about who the shareholders are, who manages the franchise etc. This may require a separate filing on the company's behalf, which will then be flowed on to you and the new member/old member.

As Rod and AnnaLJ have mentioned, your rights and obligations are primarily found in your franchise agreement. Take a look at this, in particular, the provisions for winding down a franchise, for transferring shares, for changing governance, amongst others.