Franchise Deposit Agreement Template for Australia

The Franchise Deposit Agreement is a crucial document used in Australian franchise transactions to protect both parties' interests during the initial stages of franchise acquisition. This agreement is typically executed after initial franchise discussions but before the main franchise agreement, serving as a commitment mechanism while due diligence and negotiations are completed. It must comply with the Australian Franchising Code of Conduct and relevant state/territory regulations, particularly regarding cooling-off periods and disclosure requirements. The document specifies deposit handling procedures, conditions for refund or forfeiture, and the process for converting the deposit into the franchise fee once the full franchise agreement is executed. It's essential for franchisors expanding their network and prospective franchisees seeking to secure their interest in a franchise opportunity.

1. Parties: Identifies the franchisor and prospective franchisee, including full legal names, ABNs, and registered addresses

2. Background: Contextualizes the agreement, noting the franchise system and the prospective franchisee's interest in acquiring a franchise

3. Definitions: Defines key terms used throughout the agreement, including 'Deposit', 'Franchise Agreement', 'Franchise System', etc.

4. Deposit Amount: Specifies the deposit amount, payment method, and timing requirements

5. Purpose of Deposit: Explains the purpose of the deposit and its relationship to the full franchise fee

6. Holding of Deposit: Details how and where the deposit will be held (e.g., trust account) and any interest arrangements

7. Application of Deposit: Describes when and how the deposit will be applied toward the franchise fee

8. Refund Conditions: Specifies circumstances under which the deposit will be refunded

9. Forfeiture Conditions: Outlines conditions under which the deposit may be forfeited

10. Cooling-off Rights: Explains the statutory cooling-off period and related rights under the Franchising Code of Conduct

11. General Provisions: Standard contract clauses including governing law, notices, and entire agreement