The Due Diligence Process by Benefitz

THE DUE DILIGENCE

PROCESS

THE DUE DILIGENCE PROCESS You will now have a good understanding of the success of the TDDA Franchise system and you will be familiar with the services that TDDA offer and how Franchisees earn income. You will have a genuine interest in being part of TDDAâ&#x20AC;&#x2122;s team to create drug-free environments. This stage requires you to do some homework and due diligence to ensure you satisfy any concerns you may have. Things that will require your attention: 1. Identify and choose a territory 2. Funding your Franchise 3. Completing a business plan 4. Completing a profit and loss 5. Arrange prchase and fit out for your TDDA van 6. Obtain accounting advice 7. Obtain legal advice 8. Create a business entity 9. Preâ&#x20AC;&#x201C;Franchise approval 10. TDDA Disclosure Document and Franchise Agreement There may well be other subjects that you want to consider as you move through the next steps to assist you through the due diligence process so we have collated information on each of the subject matters. All suppliers are independent of TDDA and do not offer TDDA any incentives to recommend them to Franchisees.

FUNDING YOUR FRANCHISE Access to funding is vitally important for any new Franchisee and the speed and ease of this process will largely depend on how well organised the Franchisee is and the structure of their proposed borrowing. TDDA strongly recommends that you start organising access to finance as soon as you possibly can. In an effort to assist in this process TDDA has researched various independent finance brokers who have a relationship with a number of different banks. The broker understands the TDDA operation and can make accessing finance as quick and painless as possible. Finlease (Australia) Pty Ltd Alex Charilaou A. Unit 11, 14 Albert Street, Blackburn VIC 3130 P. +61 3 9878 4633 M. 0407 460 144 E. alexfinlease.com.au W. http://www.finlease.com.au/

THE TDDA VAN Every TDDA Franchisee starts their operation with a Ford Transit high roof, long wheel base van fitted out to TDDA specifications. TDDA has created a set of internal fit out specifications for the Ford Transit to be used by our approved supplier. In respect to purchasing the van you will need to: 1. Liaise with Ford Australia to arrange the purchase and delivery of the Ford Transit van 2. Book the van to be fitted out with a TDDA approved internal fit out supplier The delivery of a fully fitted out van takes up to 6 weeks. TDDA have negotiated with Ford Australia and as a result have been recognised as a Gold Level Business Fleet partner with the Ford Franchise Program. Any new Franchisee can visit www.fordfranchise.com.au and enter the code FFP800 to access a vehicle and a local dealer. You will need your company name and ABN details to use this Ford discount.

ACCOUNTING ADVISERS When entering into any Franchise Agreement itâ&#x20AC;&#x2122;s important to have access to well informed independent advice. A good accountant can provide advice on your company structure and assist with capex forecasts and ROI indications. They can also assist with ongoing advice as you grow your business. TDDA recommends that when seeking accounting advice that you choose an advisor with franchise sector knowledge and background. This sort of experience will save you both time and money. If you do not have a preferred contact the following will be able to assist you: BNR Partners Jason Bertalli P. 1300 932 378 P. +61 3 9781 6800 E. jbertalli@bnrpartners.com.au W. http://bnrpartners.com.au/

MJS Business & Financial Services Malcolm Stewart P. +61 8 9381 9377 E. Malcolm@mjsbusiness.com.au W. http://www.mjsbusiness.com.au

Franchise Council of Australia P. 1300 669 030 W. http://www.franchisebusiness.com.au/service-suppliers/-/all/all/category/franchise-consultants-0 The Franchise Council have a list of business advisers, consultants and accountants on their website.

LEGAL ADVISERS When entering into a Franchise Agreement you will require independent legal advice. TDDA recommends you seek legal advice from an advisor with franchise sector knowledge and background. This experience will save you both time and money. If you do not have a preferred contact the following will be able to assist you: Robert James Robert Alderuccio P. +61 3 8628 2005 E. robert@robertjames.com.au

HWL Ebsworth Lawyers Peter van Rompaey P. +61 3 8644 3506 E. peter.vanrompaey@hwl.com.au

HWL Ebsworth Lawyers Veronica Jumeaux P. +61 8 9420 1514 E. vjumeaux@hwle.com.au

Borrello Graham Lawyers Joe Lazzara P. +61 8 9404 9100 E. info@borrellograham.com.au

DMAW Lawyers Ramsey Andary P. +61 8 8210 2229 E. randary@dmawlawyers.com.au

CREATING A BUSINESS ENTITY If you don’t already have an Australian company entity you will need to create one. This company entity will be the legal vehicle that you will use to enter into the TDDA Franchise Agreement. In creating a company entity you need to consider: • What company structure is right for you • Choosing a company name (this can be personalised to you)

E.g. Joe Bloggs T/A The Drug Detection Agency Brownsville

• Understanding your legal obligations

TDDA recommends that you seek independent legal and/or other professional advice and confirm what is the right structure for you. If you choose to register a company yourself, this can be done online at www.asic.gov.au > for business > Starting a company > How to start a company. Once your company is registered you will need to then register your trading name. The registered trading name needs to be: The Drug Detection Agency – (territory) You will then need to send TDDA the following information: 1. A copy of your certificate of company registration 2. Your Australian Company Number (ACN) or your Australian Business Number (ABN) 3. A copy of your certificate of registered trading name 4. A copy of your certificate trading name key

All the above information is required by TDDA to be entered into your Franchise Agreement.

PRE-FRANCHISE APPROVAL Part of the due diligence process is TDDA ensuring we are recruiting the best possible people into the group. The right people are very important to our other Franchisees and our clients. As part of this all Franchisees are required to complete: 1. 2. 3. 4.

Hair test Criminal History check Online psychometric test Background/previous employment reference checks

THE FRANCHISE AGREEMENT The TDDA Franchise Agreement complies with the requirements of the Franchising Code. The main body of the agreement sets out the standard obligations and protections for both the Master Franchisee and the Franchisee. Included is a schedule that forms part of the Franchise Agreement that is personalised for each individual Franchisee. For TDDA to populate an individualised Franchise Agreement we require the following information: • • • • • •

Name and postal address of the business entity that is entering into the Franchise Agreement ACN/ABN of the Franchisee Company Name and postal address of the Principal Name(s) of the Guarantor(s) Name of the chosen territory Commencement date (New Franchisees can enter into a TDDA Franchise Agreement to secure a territory with a delayed commencement date)

A form will be provided for you to complete. Once TDDA have received the required particulars, these will be populated into a personalised TDDA Franchise Agreement. The Franchising Code sets out a time line that needs to be adhered to in relation to the Franchise Agreement process. 1. Your Franchise Agreement, a relevant Disclosure Document and a copy of the Franchising Code will be sent to the franchisee. Electronic delivery is the preferred and most efficient method 2. Upon confirmation of receipt of the above-mentioned documents the mandated 14-day disclosure period begins. This period is designed to give the Franchisee time to review the populated Franchise Agreement 3. At the completion of the 14-day disclosure period two hard copies of the Franchise Agreement and the relevant Disclosure Document are forwarded to the potential Franchisee for their signature. Documents cannot be signed prior to the completion of the 14-day disclosure period 4. When the Master Franchisee has received both signed copies from the Franchisee they then sign both copies of the documents and return one to the Franchisee 5. This starts the 7-day cooling off period. This period is designed to give the potential Franchisee time to consider their options prior to the Franchise Agreement becoming binding 6. At the completion of the 7-day cooling off period, the Franchise Agreement is legally binding