Commercial Law

Business owners and managers in Australia must comply with numerous legal responsibilities and reporting obligations. An experienced commercial lawyer can help you navigate the many laws and regulations to ensure that your business is best placed to seek new opportunities and face any legal challenges along the way.

Our business lawyers can assist with a range of commercial matters, including:

• Business structures
• Buying and selling a business
• Due diligence when purchasing a business
• Franchising
• Business and commercial contracts
• Retail and commercial leasing

Choosing a Business Structure

Choosing the right business structure is vital as it affects the legal and financial responsibilities of the business owner.

An individual can set up a business as a sole trader using an Australian Business Number (ABN). Operating as a sole trader is simple and cost effective however the owner is wholly liable for the debts and activities of the business.

A partnership may be formed when two or more people share the same business vision with each contributing their skills, experience, and resources to the partnership. The downside is that there is potential for conflict between partners who are jointly and severally liable for all debts of the business. Having a written partnership agreement can help guide the management of the business and deal with any legal matters along the way.

A company is a more complex legal structure, which has some significant benefits in terms of limitation of liability but does have more compliance requirements. While there are some setup and ongoing costs involved, companies may be able to access more favourable tax rates and transfer of ownership can be affected through the sale of shares.

Trusts can help to protect assets and may offer taxation benefits. Trusts can be complex, however, and must be set up and administered correctly so they obtain their anticipated objectives.

Buying or Selling a Business

An agreement for the sale and purchase of a business should be documented in a written contract, and each party should be legally advised. In many cases, we recommend also consulting an accountant so we can work together to help structure the transaction to provide an optimum outcome. The transaction may involve consideration of:

• the structure and apportionment of the purchase price, taking into account goodwill, stock, plant, equipment, and inventory
• Goods and Services Tax (GST) and other taxes such as Capital Gains Tax (CGT)
• the suitability of and transfer arrangements for ancillary agreements such as commercial leases and service contracts
• intellectual property such as business names, trademarks, and domain names and provisions for transferring these assets to the new owner
• employment arrangements for existing employees, transfers, offers, redundancies, and calculation of leave and other entitlements
• restraint of trade and confidentiality provisions
• agreed training periods, representations, and warranties

Franchises

A franchise is an arrangement whereby the owner of a branded product or service (the franchisor) assigns to an independent third party (the franchisee) the right to sell that product or service using the franchisor’s brand, marketing, and systems.

The franchisee buys a licence to run the franchise business through its own business entity but operates using the franchisor’s existing structure. Generally, the licence entitles the franchisee to access the franchisor’s standard procedures, administrative and marketing systems, and training.

Franchises in Australia are regulated by the Franchising Code of Conduct which sets out mandatory requirements for the sale, purchase and operation of franchises and provides important protection for franchisees.

Commercial & Retail Leasing

Our experienced property and commercial lawyers can assist with all your leasing needs. If you are leasing commercial premises, whether as a landlord or tenant, it is important to take steps to protect your investment and to understand your rights and responsibilities under a proposed leasing arrangement. All leasing negotiations should be documented in a written lease agreement and each party independently advised.

Retail Shop Leases

In Western Australia, most retail shop leases are regulated by the Commercial Tenancy (Retail Shops) Agreements Act 1985. All owners of retail shops should have a good understanding of the Act, as it provides protections for tenants. The Act generally applies to leases for premises with a lettable area of 1000 m² or less and that are:

• used for carrying on a business in a retail shopping centre (or a group of premises, of which five or more are used for the sale of goods by retail or a specified business)
• not in a retail shopping centre, but that are used (or predominantly used) for the sale of goods by retail or used for conducting a specified business.

Leasing disputes can arise when the parties do not fully understand their rights and responsibilities under the lease agreement, or the agreement is poorly drafted with unclear or absent terms. Alternatively, disputes can result from financial pressures, for example, when a tenant is unable to meet its obligation to pay rent. An experienced lawyer may be able to negotiate an outcome that suits everyone, even if there has been a long history of conflict during the tenancy.

If you need assistance, contact [email protected] or call 08 9221 6820 for expert legal advice.