Due Diligence is present in business law of Australia which makes sure that important information about the business is assessed by the buyer. In a business relationship, it is necessary in determining the level of judgement which is a part of due diligence. Investigation of all aspects of the business for sale is conducted in the corporation law of Australia which looks into the financial performance, legal and tax compliance, customer contracts and intellectual property of the business. Due Diligence is usually conducted after the seller agreed in the principle to the deal but before signing a contract which is binding. The information of due diligence is highly sensitive as well as confidential. The seller may want to sign a non disclosure agreement before accessing the information (Emerson, 2010). Several cases follow due diligence like retailing act and franchise code of conduct. This assignment deals with two business partners opening a shop and making a relationship of contract with the franchisor. Also required for the recruit are the new permanent staffs. In order to solve the cases there are many acts which are described in this report.
In the Case Study, two business partners, Layla and Emile opened a shop called “Muffin Break” in the Westfield Shopping Centre Food Court. It is necessary that there should be a relationship with the Franchisor (Food Co) for making the agreement and the business partners. Consideration took place between the business partners and the Franchisor according to the Australian Franchise Act.
There is a Franchise agreement between the Franchisor of the Food Company with whom the agreement is made and the business partners. A document requires to be disclosed with the franchisor where there are industrial regulations of the Franchisor Code described with certain regulations and terms according to the Competition and Consumer Regulations 2014.While there are franchising between the business partners and the Food Company at the time according to the sub clause (4) Product code is required in the franchise while it takes place between the Food Company and the business partners. The franchisor must help the business partners regarding the lease problem within a period of two years. Franchise agreement takes place in terms of Paragraph (2)(b) of the contract (Spedding, 2009). There are mentioned some sections with codes and clause of franchise agreement in column 1 and column 2. The Franchisor should follow and the business partners should draw the concepts clearly before they form an agreement.The codes are described as follows
[Source:www.legislations.gov.au]
The Franchise agreement can be in written, oral and implied terms. The franchisor of the food company should solve any problems and service goods after two years of the franchise according to the Australian government franchise code of conduct (“Australian Competition and Consumer Commission”, 2016). If there is any breach in the policies of the franchise agreement, the franchise will not be allowed to continue the trade of commerce and apply the contravention of industrial code according to section 51 AD of breach of the franchisee code and give penalty enforced by the law. The franchisor has to give information when applying formally, expressing an interest in and buying a franchised business. The information statement is a short document setting some of the risks and rewards of the franchise. The new code introduces an obligation under the Code for parties to act in good faith when they deal with one another. The franchising code of conduct introduced financial penalties and notices for infringement for breaching of the code. It needs the franchisors for providing prospective franchisees with a short information sheet in order to outline the risks and the rewards of the franchising. It needs additional disclosure about the ability of the franchisor and a franchisee in order to online sell. It prohibits the franchisors to impose significant capital expenditures except in limited circumstances.
A lease is at the centre of the relationship between the landlord and the tenant in a retail shop. It is a huge commitment to enter into a lease. The contracts are often five years and may run upto 25 years. Things do not go as planned. Rights and responsibilities must be understood by the tenant as well as the landlord. The business partners also have to follow the Release Lease Act 1994 according to which certain rents requires to be given to the person whose place is taken for the purpose of occupation (“NSW Small Business Commissioner – Home”, 2016). There is an agreement between the owners of the place and the person who is taking the lease in that place while taking a lease according to the Retail Shop lease act 1994, revised in 2015. It is essential that renting should be paid after the possession of the lease. The time period should be properly written in a disclosed document with valid terms. There are specific limitations which the Westfield Shopping Centre Food Court is set. Emily and Layla who are the business partners in this particular case study require following those limitations. The lease cannot be taken for a long period of time after 25 years. The time and the documentation require extending or renewing after 25 years. The commencement requires following the sections exempted from the act. Lease disclosure update requires being in the written format. Repealing forms require to be prescribed with written disclosure update letter between the person who is taking the lease and the owner of the property. Emile and Layla should comply with the rules and if the rules are broken then the penalties have to be given to the Westfield Shopping Centre.
If the lessee who is the business partners (Emily and Layla) did any injury to the property of the lessor which is the Westfield Shopping Centre Food Court, then the lessor could ask for compensation by suing him in the Australian court. Penalty notices are sent by the court for breaching the rules. The rules require to be followed by Emile and Layla and breaching the rules can result in their penalty and their license will be cancelled and they will be imprisoned under the Australian law.
After the lease is taken, it is essential that part time and full time permanent staff require to be recruited in the shop by Emily and Layla. For recruitment various processes should be followed according to the employment law. According to that act, national workplace relationship is required to be followed by the staffs who are recruited in the organisation.
The system based on the bargain at the organisational level also providing the protection from unfair release for the employees is known as Fair Work Act 2009. This act refers to the protection for low paid and the right to be characterised atr the workplace. Fair Work Act 2009 accommodates the terms stating of jobs and the rights to duties of the workers and the representative associations in connection with the business.
The national framework of the employees and business are controlled by the Fair Work Act. Employment which is not secured under the national industrial framework are managed by the important state modern relations framework. However, the Fair Work Act had a few non-national framework employees. The Act made a consistence of the requirement of the administration and builds up the bodies to oversee the act which includes the FWO and the Fair Work Australia (FWA). There are a few qualifications under the Fair Work Act which reaches out to non national framework employees. There are many parts of the Fair Works Act presenting chances in delivering legitimate opportunities to interest by full grown labourers and in connection to which ALRC makes recommendations including the privilege for asking the adaptable working, arrangements which are acknowledged by the notifications of the end of occupation or the termination of employees and the general assurances arrangement.
There are 44 clauses of Fair Work Act 2009 required to be discussed in a scheduled way of acts under section A. There should be a relationship between the employer and the employee and they should not discriminate between the employer and the employee in the company according to the government. Several clauses are present for different employees. Clauses 3 of the Fair Work Act 2009 are applied. Part time employees require following specific rules which are required to be settled by the supervisor and Emile and Layla should use the rules of the Fair Work Act 2009 where the clauses should be applied to the employers for the recruitment of the employees and making them understand about the rules of the clauses so that the employees do not violate the rules of the clause of the regulations. According to hourly rate or standard rate of level 2 rules which are implied for National Employment Standards. Full time act is required to be applied in the company to be applied in the part time employment where the requirements of the employee are fulfilled by the employer. Full time employment is required to be applied in the company for the people who is doing full time work according to Clause 12, 13, 14, 15, and 16. The business partners should use the Fair work act 2009 where these clauses needs to be applied by the employers on the recruitment of the employees and to make them understand about the rules of the clauses so that the employees for not breaking the rules (Bukarica, Dallas, & Bukarica, 2012)
When the Fair Work Act 2009 is violated according to the employer and if the employer violated the rules then he has to give $10,200 to $10,800 to the employee as penalty. These codes are reluctantly described following the clauses and the penalty in the Penalty Unit and the perspective of the FW act. There are 300 penalty units and the violation of the Fair Work Act then the unfair act is termed. The rules have to be followed by the business partners and there should be no discrimination between the part time and the full time employees according to the Fair Work Act. The employees cannot face any problems in such cases. If there are such consequences according to the Australian National Act, they can complain against the business partners. Rules of the corporation act are incorporated in the shop which they want to open.
The Fair Work Act 2009 governs the relationship of the employer with the employee in Australia. They provide a safety net of minimum entitlement which enables the working arrangements and the fairness during work preventing discrimination against the employees (Khurtsidze, 2013).
The Fair Work Act 2009 and the Fair Work Amendment Act 2009 changes the Fair Work Act in allowing states in referring the matters to the Australian federal government in order to form a national workplace relations system. Before this workplace laws were set and administered by different states. States kept their workplace relations powers over state and local government employees.
The Independent Contractors Act protects the rights of genuine independent contractors in order to enter into a contract for the services and prevents the interference by any other party (Bailey, 2011).
Many acts are described in the report which follows such an employment act, fair work act, retail lease act, franchise code, real property act and with many sections they are described by following different rules. The agreement or the deal took place between both the parties and in the consequence many federal rules of the Australian government have been stated. The implications of breaching the acts and the penalties with punishments are also defined clearly. The implication of the laws and the notices followed several terms taking place between Emily and Layla, the lessee, the lessor The Westfiled Shopping Centre Food Court and the franchisor who is the Food Co. The relationship between the employee and the employer and the rules of violation of the law are described and take place the proper terms of the deal.
Australian Competition and Consumer Commission. (2016). Australian Competition and Consumer Commission. Retrieved 22 August 2016, from https://www.accc.gov.au/
Bailey, M. (2011). Bringing ‘the city to the suburbs’. Australia: Macquarie University.
Bukarica, A., Dallas, A., & Bukarica, A. (2012). Good faith bargaining under the Fair Work Act 2009. Annandale, N.S.W.: Federation Press.
Emerson, R. (2010). Franchise Encroachment. American Business Law Journal, 47(2), 191-290.
Federal Register of Legislation. (2016). Legislation.gov.au. Retrieved 22 August 2016, from https://www.legislation.gov.au/
Freimüller, H. (2012). Due diligence, disclosures, and warranties in the corporate acquisitions practice (21st ed.). London: Graham & Trotman
Khurtsidze, T. (2013). Franchise agreement. Saarbrücken: LAP LAMBERT Academic Publishing.
NSW Small Business Commissioner – Home. (2016). Smallbusiness.nsw.gov.au. Retrieved 22 August 2016, from https://www.smallbusiness.nsw.gov.au/
Spedding, L. (2009). The due diligence handbook. Amsterdam: CIMA.
Welcome to the Fair Work Ombudsman website. (2016). Fair Work Ombudsman. Retrieved 22 August 2016, from https://www.fairwork.gov.au/
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