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ARTICLE · 04 MARCH 2013

Whose Goodwill is it Anyway? – Goodwill and Franchise Relationships

Addisons
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Given recent Government announcements, it's a fitting time to explore a vexed issue in franchise relationships.

AustraliaCorporate/Commercial Law
Daniel Goldberg
Daniel Goldberg

Given the Federal Government's announcement on 4 January 2013 of a review of the Franchising Code of Conduct (Code) set for release in April 2013 (2013 Review),1 it is a fitting time to explore a vexed issue in franchise relationships affecting franchisors and franchisees alike: the issue of goodwill.

How do you determine who is entitled to the goodwill of the business when a franchise relationship has come to an end? Is the franchisee entitled to the goodwill developed during the course of the franchise relationship, even though one important source of this goodwill might be the franchisor's trade mark, branding or other assets? How effectively can franchisors protect the goodwill in their franchise systems?

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