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Bubble tea, also commonly known as boba, is a popular tea-based drink that originated in Taiwan. First created in the 1980s, bubble tea quickly spread across Asia and eventually made its way to the West. Today, it boasts a massive global market and continues to grow in popularity.
If you’ve been thinking about starting your own bubble tea business, you could be the next go-to spot where people queue up to satisfy their tea cravings. But before you start mixing tea and pearls for your customers, it’s crucial to ensure your business is set up correctly. Launching a bubble tea business involves choosing the right business structure and putting essential legal protections in place to help your venture thrive in a competitive market.
That’s where we come in — read on to learn more.
Where Did Bubble Tea Come From?
Taiwan has long had a rich culture and love for tea. In the 1980s, the Taiwanese tea industry began experimenting with iced tea, which eventually led to the creation of bubble tea (also known as boba). Bubble tea is characterised by its tea base, which is combined with either a milky or fruity flavour. While tapioca pearls are the traditional topping, the market has since expanded to include a wide variety of pearls and jellies that can be added to the drink. Once all the ingredients are combined, the bubble tea is shaken well and served to customers.
Today, there is an incredible variety of bubble tea drinks and toppings. It’s common for bubble tea shops to continuously innovate their menus, introducing new flavours and combinations to captivate their customers. With such a vast range of options, bubble tea enthusiasts can customise their drinks to suit their preferences, ensuring there’s always something for everyone.
How Much Does It Cost To Start A Bubble Tea Business?
To start a bubble tea business, you will need a number of supplies. From the tea itself to the equipment required to properly make and serve it, there will be some initial expenses when launching your bubble tea business.
The exact cost of starting your bubble tea venture will depend on several factors, so it’s important to budget carefully. Plan your expenditures and assess your finances. While doing so, be sure to also account for other critical aspects of starting a bubble tea business, such as legal considerations, market research, competitor analysis, your business goals, and advertising strategies. Do you research and put everything together in a business plan, that way you can ensure you don’t overlook anything important.
How To Open A Bubble Tea Business: A Legal Guide
Starting a bubble tea business needs to be done with care and planning. Afterall, you could have the best new boba in town, however, it won’t matter if your business isn’t set up to support this. Understanding the legal side of starting any kind of business is crucial for a successful venture. Keep scrolling to learn more.
Registering Your Bubble Tea Business
The first key legal decision you’ll need to make when getting your bubble tea business off the ground is choosing the right business structure to register it under.
A sole trader or partnership structure is relatively simple to set up. To start operating as a sole trader or in a partnership, you’ll need to acquire an Australian Business Number (ABN) and register a business name (unless your name, or all the names of the partners, will be used for the business).
However, a significant drawback of these structures is the lack of legal separation between you and your business. In a sole trader or partnership setup, the business is legally attached to you (or all the partners). This means you’ll have unlimited liability for the business’s debts and obligations. If something goes wrong, your personal assets could be at risk.
A company, on the other hand, is a separate legal entity. While it’s a bit more complex to set up, a company offers limited liability, which can provide greater protection. If something happens with your bubble tea business, your personal assets are generally safeguarded. For this reason, registering as a company is often the less risky option for serious business ventures.
If your bubble tea business is more than just a casual venture, we recommend setting it up as a company. However, it’s a good idea to seek legal assistance with this process. Setting up a company involves meeting regulatory requirements set by ASIC, appointing directors, assigning shareholders, and deciding on company governance matters. Having a legal expert guide you can ensure everything is done correctly and efficiently.
Essential Legal Documents For Your Bubble Tea Business
Once you bubble a business is set up, you will also need the right legal documents to help protect it. Legal documents can help secure your revenue streams, prevent disputes, limit your liabilities and overall, provide necessary protection for your business. It’s important to have them professionally tailored to meet the exact needs of your bubble tea business. Here’s a few legal agreements you may want to consider:
Supply Agreement: To serve bubble tea, you may need to have a supplier providing necessary ingredients. It’s important to have a clear contract in place with your suppliers before engaging them.
Employment Agreement: Once your business begins to grow, you might think of hiring employees to work in your bubble tea business. Employment agreements can help establish rights and responsibilities from the start.
Non-Disclore Agreement (NDA): Protecting your bubble tea business’s confidential information is important – be sure to have an NDA ready for necessary situations.
Privacy Policy: If your bubble tea business is going to have a website, then it’s important to have a privacy policy. A privacy policy is legally required if your business website collects personal information from its users.
Protecting You Bubble Tea Business’s Brand Identity
Starting a bubble tea business requires careful planning and effort. The last thing you want is for someone to copy your ideas and unique brand. That’s why it’s crucial to protect your bubble tea business’s brand identity and intellectual property (IP) through the right legal measures.
If you have a distinctive logo or business name, make sure to apply for a Trade Mark. This process can take at least 7 months, so it’s wise to start the application early. Additionally, if you’ve developed unique recipes or proprietary methods, consider using NDAs, confidentiality clauses, and copyright disclaimers to safeguard your creations.
Consulting with a legal expert can provide valuable insights on the best strategies to protect your IP, ensuring your hard work and creativity are secure.
What Laws Do I Need To Follow When Starting A Bubble Tea Business?
Setting up your bubble tea business is one thing, but actively keeping it out of trouble is another. While legal compliance isn’t overly complicated, there are several laws and regulations that can significantly impact your bubble tea business. If you’re not fully aware of them, it’s easy to make mistakes that could lead to serious consequences.
The best course of action is to understand your legal obligations and integrate compliance measures into your everyday business practices. This ensures your business operates smoothly and stays on the right side of the law.
To help you get started, we’ve outlined some key regulations to watch out for below.
Food Safety Standards: In Australia, food safety standards are primarily set by the FSANZ Code. When preparing, handling, and storing your bubble tea drinks or ingredients, it’s essential to ensure your practices align with FSANZ requirements. This includes proper storage of perishable items, maintaining clean preparation areas, and following hygienic practices. Non-compliance can result in penalties or even closure, so regular audits and staff training are vital.
Employment Law: If you plan on hiring employees, you’ll need to ensure you’re treating them in accordance with Fair Work Australia standards. This includes meeting obligations for minimum wage, leave entitlements, and working conditions. You must also comply with Workplace Health and Safety (WHS) regulations to provide a safe working environment.
Australian Consumer Law: Upholding consumer rights is a key obligation for all businesses. As a bubble tea business, it’s crucial to ensure you’re treating your customers in accordance with ACL requirements, including: Accurate product labelling, transparent pricing, clear refunds, returns, and warranty policies and ethical advertising practices. Failing to comply with ACL can lead to significant fines or reputational damage, so having a robust customer complaints process is important.
Data and Privacy Law: When running your business, especially if operating online, you’ll likely collect customer information. It’s important to implement the right security measures to protect this data. Key measures can include, but are not limited to, having a clear Website Terms and Conditions, Privacy Policy and a Data Breach Response Plan.
Permits and Local Council Regulations: Prior to starting your bubble tea business, it’s important to know if you require any permits and licences from your local council or state authority. Every locality tends to have different rules, so it’s necessary to do your due diligence beforehand.
Environmental Regulations: Be aware of environmental regulations that may affect your business, such as waste management protocols and restrictions on single-use plastics. Compliance with these regulations is essential to avoid penalties.
Key Takeaways
A bubble tea business is an excellent opportunity to further expand the reach of an already loved product. However, it’s important to take care of the legal considerations when starting your bubble tea business, to ensure your venture is off to a strong start. To summarise what we’ve discussed:
- Starting a bubble tea business involves choosing the right business structure, such as a sole trader, partnership, or company, each with different legal implications
- Key legal documents like Supply Agreements, Employment Agreements, NDAs, and Privacy Policies are essential for protecting your business and operations
- Protect your brand by trademarking your logo and business name and safeguarding proprietary recipes with NDAs and copyright disclaimers
- Ensure compliance with laws including Food Safety Standards, Employment Law, Australian Consumer Law, and Data and Privacy Law
- Obtain necessary permits, licences, and registrations from local councils and adhere to environmental regulations like waste management and plastic use restrictions
- Integrating legal compliance into daily business practices helps avoid costly mistakes and keeps your business running smoothly
If you would like a consultation on starting a bubble tea business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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