Acquiring Competitive Franchise Networks

The difficult economic conditions and the high numbers of franchise systems in Australia are likely to result in significant opportunities for franchise networks that are performing strongly to acquire a competitive network that is underperforming. In addition to the considerations that are applicable to all transactions in the franchise industry (for example, financing, structuring, due diligence and implementation), if the acquisition is of a competitive network then a number of additional factors needs to be considered.

The first and most important issue is the potential impact on competition in the relevant market and whether the ACCC is likely to object to the acquisition. The acquisition of the Australian operations of the Blockbuster network by Video Ezy in late 2007 is an example of the role that the ACCC can play where one competitor is buying another. While the ACCC eventually decided not to object to the proposed acquisition on the basis of court