The introduction of the Personal Property Securities Act
2009 (Cth) ("PPSA") in
October 2011 will see the launch of new rules that
govern how security interests are created and most significantly,
how they are enforced.
Impact of Franchising
You may be surprised at how many of your franchise agreements
contain terms that could fall within the PPSA definition of
For example, each of the following terms will constitute a
security interest for the purposes of the PPSA:
deferred payment terms for the franchise system
deferred payment terms for the purchase of plant and
goods on credit and/or
Those security interests must be registered on the Personal
Property Securities Register for each franchisee to protect your
security interest in the franchise should your franchisee become
insolvent. A failure to register your security interest may result
in you losing title to those goods/equipment.
You will also need to take steps to protect your interest in
goods/equipment if you acquire those items from suppliers on
retention of title, credit, lease or similar terms.
What you need to do
If your franchise business involves any of the above activities,
you need to consider:
ensure your interest in goods/equipment you provide on credit
or lease remain enforceable, and
review your terms of trade & franchise agreements to ensure
they will be enforceable after the PPSA commences.
The implementation of the PPSA will require careful planning as
it will impact every franchise system.
How we can help
Thynne & Macartney are prepared to guide and assist our
clients in navigating through the risks and compliance issues
associated with the PPSA.
We can offer general PPSA advice and advice on specific issues
of concern. We can also assist in registering your security
interests. If required we can have a member of our team attend your
workplace to conduct a PPSA seminar specifically tailored to your
Please contact Amanda Bull or Michael Goss for further
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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