Personal Property Securities Interests: Franchising update

Summary

The new law

The Personal Property Securities Act (PPSA) replaces the existing law on the how security is taken over assets (except for land and buildings). Franchisors have just over a year to prepare for the commencement of the new regime in May 2011 and will need to start preparing now to ensure that they are protected when the regime commences.

While the PPSA is intended to 'reduce red-tape for business', in the short term it means more work for franchisors, because they will need to take steps to protect their interest in their goods if the franchisor:

• provides goods on credit to a franchisee;
• leases goods to a franchisee;
• wishes to sell a franchise business to a franchisee on a deferred payment basis and protect its interest in capital equipment provided to the franchisee; or