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The new National Business Names Register ("Register")
commenced on 28 May 2012. The Register is an online register,
operated by the Australian Securities and Investments Commission
("ASIC"). It is a national register of business names.
Previously each State and Territory had its own register which
meant organisations that operated nationally had to maintain
business name registrations in each State and Territory, imposing
an administrative burden and cost on such organisations.
With only one application now required to register a business
name nationally, the new system will ensure the administration
costs and burden for businesses operating in multiple States or
Territories are drastically reduced.
All business names registered on the various Sate and Territory
registers automatically transferred to the Register on 28 May 2012.
However, please note some information did not transfer properly to
the Register and ASIC is working on rectification.
In relation to what the changes mean for franchise networks
please note:
As was the case prior to 28 May 2012, if a franchisee proposes
to trade under a name that is not its own entity name (i.e. company
name) the franchisee will need to register a business name. For
most franchise networks the business name is usually the name of
the franchise followed by the territory or location from which the
franchise business operates. For any franchisee who has not
registered a business name, they should be notified to register
their business name.
Registration of a franchise business name no longer requires
the franchisee to provide the written permission of the franchisor
to ASIC. However, any business that applies to register a franchise
business name should ensure it has authority to trade under that
name through its franchise agreement. ASIC will advise applicants
on the online Register that it is still the responsibility of each
business to ensure they have the requisite authority and that they
do not pass off as another business or infringe on other
businesses' trademarks.
There is some concern that businesses will be able to utilise
the goodwill of well-known franchise brands by adding geographical
differentiators after a business name. The onus will be on
franchisors to regularly check the Register to ensure that only
authorised franchisees have registered business names in the name
of the franchise. Franchisors should also develop systems to ensure
franchisees only register business names once settlement of the
purchase has occurred and/or the franchise agreement has been
signed by the franchisee.
We recommend franchisors should conduct an audit of all
existing registered business names to ensure they have been
correctly transferred to the new Register and to also determine
whether to cancel the registration of business names that are no
longer required (e.g. because the franchise has ceased to
operate).
It is not currently clear how ASIC will deal with the
cancellation of franchisee business names in circumstances where
the franchise has ceased to operate or the franchisee's
franchise agreement has been terminated or has expired. As the
Register is an online register there is no need for franchisors to
hold pre-signed business name cancellation forms to enable the
franchisor to cancel the registration of the business name upon
termination or expiry of a franchise agreement
Franchisors may need to amend their franchise agreements to
ensure they have the power to cancel the registration of a business
name upon termination or expiry of a franchise agreement.
Finally, franchisors need to ensure that service addresses are
up to date. Renewal notices will be sent by ASIC to existing
service addresses provided by the state and territory agencies.
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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