NSW Franchise Agreement Ending - Who Owns the Client List?

[TedP02]

Hi,
I'm currently in a franchise type arrangement (no written contracts) whereby I have use of the company name and some company owned equipment and I pay a monthly fee back to the company. I operate as a sole trader.

This was a new business when started, so there was no client base when I began operation.

There was never any verbal or written agreement which talked about client details in the case of the relationship ending. So if I leave, do I have to give over my client list or is this mine to keep under commercial law?

 

[John R]

Hi @Bob2014
Interesting question.

1. In the absence of a written agreement, what did you specifically agree to as part of the agreement?
2. Do other businesses also share the company's business name?
3. What company equipment do you use?
4. How is the monthly fee described - Is it a commission, licensing fee or something else?

 

[TedP02]

1. our agreement covered things about the monthly payment and what equipment would be provided. Nothing too specific that would help determine the answer I don't think.
2. Yes, another business shares part of the name. Our business is set up to be an "offshoot" of the parent business, so they share a "branding" I guess you could say. Their business is in no way related to ours though in terms of what services we offer
3. We use a custom made vehicle
4. Fee is % based on our total revenue per month.

 

[John R]

Hi @Bob2014,
Have you considered engaging a lawyer to attempt to resolve the ambiguity in your commercial relationship by formalising the agreement in writing (and in turn, clarifying the ownership of the client list/database before any termination of the relationship)?

 

[TedP02]

no haven't gone down that road. Was hoping there was an easy answer, but maybe not for this one......

 

[Rod]

With nothing in writing the issue is murky at best. Because you are the one doing the work and I assume the marketing for new customers, then courts would look favourably on you owning the client list. However, seemingly little details can easily change the decision of courts. Best to straighten out the mess now if the business is growing otherwise you'll likely have a bigger mess later. If the business is declining it may not matter and just run the business till it no longer has a viable client base.

 

[John R]

Hi @Bob2014
I agree with Rod, it may be best to clarify now and hopefully avoid a messy legal dispute later on.

 

[TedP02]

thanks everyone. We're just about to cease our relationship with the parent company. They have asked for the client list and I've decided to provide this to avoid disputes. The nature of the business is that it's my services the clients want, so most have indicated they will just continue with me moving forward. However, I'll definitely make sure we enter a proper legal agreement covering all this type of stuff if we go down this path again!