If you’ve always dreamed of designing and selling your own apparel, then starting a fashion company might be on your 2024 vision board. 

When it comes to starting a fashion company, there’s a lot of factors to think about. It can be hard to know where to begin. However, one crucial aspect you cannot overlook is legal compliance and protection. Without legally securing your fashion company, everything could be lost before you’ve even had a chance to properly begin. 

Therefore, the legal side of your fashion company will play a huge role in determining its success and longevity, making it one of the most important aspects of starting your company. 

That’s where we can help – keep reading to learn more about the legal side of starting a fashion company. 

What Is A Fashion Company? 

A fashion company is an enterprise that sells anything related to fashion, from clothing to accessories. It covers a pretty broad range of products for various groups of people, so you will need to narrow down exactly what you’re selling and who you’re selling it for. 

You’ll also need to think about matters such as competition, advertising, pricing, suppliers and distributors. It’s a good idea to create a business plan and put all your ideas and research in there. When you have everything down in writing, it’s easier to identify the potential strengths and weaknesses of your company, then make decisions accordingly. 

During the planning process of starting a fashion company, it’s also necessary to consider the ethical side of fashion. Remember, as fun and creative the fashion industry can be, it also has a dark side that many consumers (and even business owners) tend to be ignorant of. 

Being up to date on the failures of the fashion industry, such as fast fashion and modern slavery is the first step to running an ethical and sustainable venture. 

Is Fast Fashion Ethical? 

No, fast fashion is not an ethical practice. Fast fashion essentially produces cheap garments at lower prices, getting new styles out to consumers much quicker. These products then can be discarded as easily as they were purchased. 

Fast fashion comes at significant cost to the environment and vulnerable workers. For starters, it increases carbon emission and produces mass amounts of waste. Additionally, the supply chains that produce these garments are notorious for having dangerous workplace environments and engaging in modern slavery practices. The collapse of the Rana Plaza garments factory in Bangladesh highlighted the atrocious working conditions and treatment of workers in factories that are often used by fast fashion companies. 

How Can Fast Fashion Companies Be More Sustainable? 

It’s difficult for sustainability and fast fashion to co-exist. Many believe the business model of fast fashion doesn’t allow for ethical practices. If you’re conscious of your company’s ethical practices, then you will need to do thorough research before engaging manufacturers and suppliers. Moreover, be transparent with your consumers about how your materials are sourced and where they have been made (watch out for greenwashing though). 

It’s also a good time to be aware of modern slavery practices with the introduction of the Modern Slavery Amendment (Australian Anti-Slavery Commissioner) Bill 2023. Modern slavery is strictly illegal in Australia and the bill aims to further address its risks. 

No matter what size a business is, it can knowingly or unknowingly perpetuate acts of modern slavery – it’s a wise idea to stay vigilant and alert as the owner of a fashion company about your own practices. 

How To Start Your Own Fashion Company 

Once you have figured out where your fashion company is going to stand ethically and sustainably, you can start the actual process of setting up your company. To start  your own fashion company, you will need to register it with the Australian Securities and Investments Commission (ASIC). 

Registering a company with ASIC can be a bit of a complex process, it’s a good idea to have legal help while you do it. To register your fashion company, you’ll need to know the kind of company structure that will be best for your venture, such as a Dual Company Structure or a B-Corp. At this point, you will also need to determine how your company will be governed as well as who the directors and shareholders are. A legal expert can guide you through this process and make sure everything gets set up the right way, so you don’t have to worry about it later on.  

Do I Need Any Legal Documents To Start A Fashion Company? 

After your company is registered, the next thing on your checklist is getting the right legal documents drafted. Legal documents are essential for a number of different reasons, they help keep your company protected, ensure your rights are secured, limit your liabilities, assign ownership where necessary and help your fashion company stay legally compliant. 

The stronger a company’s legal agreements are, the better off the company is. Talk to a legal expert about getting professionally drafted legal agreements for your fashion company – we’ve listed some legal agreements you may want to consider getting below. 

Supply Agreement: A contract between your company and its suppliers, it details what materials will be supplied, payment methods, dispute resolution, termination and much more. 

Distribution Agreement: Distributors will get your product out in the market so it’s important you’re on the same page regarding both ‘big’ and ‘small’ matters through a legal agreement. 

Website terms and Conditions: If your fashion company is going to be online, then it’s important to legally secure your website through terms and conditions. 

Privacy Policy: If your fashion company’s website collects information from its users, then to be compliant with Australian privacy laws you will need to have a privacy policy visible on it. 

Employment Agreement: When you hire staff to work in your fashion company, it’s important to have a formal agreement with them detailing their rights and responsibilities. 

IP Licence: If your designs are taking off and you’d like to monetise them without giving up ownership, then it’s important to consider protecting your ownership through an IP licence.  

Non-Disclosure Agreement (NDA): Make sure you secure your fashion companies secrets through a well drafted NDA so private matters stay private

Are There Any Other Laws I Need To Look Out For When Starting A Fashion Company?

We discussed ethical and sustainable practices earlier in the article (see above). Aside from following good business practices, there are still a number of other laws you will need to adhere to as a fashion company. 

The exact laws that will apply to your company will depend on your company operations, location and much more. However, we’ve listed a few general areas of law you will need to look out for when starting your fashion company: 

  • Australian Consumer Law (ACL)
  • Employment law
  • Intellectual property law
  • Industry specific regulations
  • Local council laws 
  • Data and privacy law 

Chatting with a legal expert is the best way to understand how to be legally compliant with the relevant regulations. We know there’s a lot of laws you need to look out for, however, with the right kind of guidance you’ll be able to run a legally compliant fashion company with ease. 

Next Steps 

Starting your own fashion company involves being legally aware, compliant and protected. It’s important to have the right kind of legal help early on so things can run smoothly. To summarise what we’ve discussed: 

  • Starting a fashion company requires legal compliance and protection to ensure success and longevity
  • Consider ethical practices, especially avoiding fast fashion’s harmful impacts
  • Fast fashion is unethical due to environmental damage and exploitation of workers, so prioritise sustainability and transparency in your operations
  • Register your company with the Australian Securities and Investments Commission (ASIC) and choose the appropriate company structure with legal guidance
  • Draft essential legal documents like supply agreements, distribution agreements, website terms and conditions, privacy policies, employment agreements, IP licences, and non-disclosure agreements
  • Be aware of and comply with relevant laws, including Australian Consumer Law, employment law, intellectual property law, industry-specific regulations, local council laws, and data privacy laws
  • Seek legal assistance early to ensure smooth and compliant operations for your fashion company

If you would like a consultation on starting a fashion company, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

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