Franchising laws across Australia have been amended.
Franchising Code of Conduct
The Franchising Code of Conduct is a mandatory industry code that regulates the conduct of franchising parties across Australia.
Significant amendments to the code introduced by the Competition and Consumer (Industry Codes—Franchising) Amendment (Fairness in Franchising) Regulations 2021 give further protection to franchisees. There are new rights in relation to disclosure, remedies and termination.
Dispute resolution amendments apply to disputes notified on or after 2 June 2021.
The amendments providing franchisees with the right to greater information and remedies apply from 1 July 2021.
Changes to the required disclosure document apply from 1 November 2021.
Some of the key changes include:
- Franchisors are required to provide a mandatory fact sheet in addition to the disclosure document, and to including additional information in the disclosure document. The disclosure requirements also apply to the transfer of an existing franchise agreement.
- Franchisors are prohibited, in certain circumstances, from requiring franchisees to undertake significant capital expenditure.
- New arbitration and conciliation mechanisms are available.
- Cooling off periods have been extended from 7 to 14 days. They also apply to a broader range of scenarios.
- Franchisees have the right to request early termination of a franchise agreement.
- The ability for franchisors to terminate agreements for special circumstances without notice has been restricted.
Updates to By Lawyers publications
The commentary and precedents within the By Lawyers Business and Franchise publications have been updated to reflect these amendments.
See Folder ‘E. IF REQUIRED – FRANCHISES‘ on the matter plans. This includes the Franchise Agreement precedent and Model disclosure document for franchisee or prospective franchisee precedent. Links are available on the mater plan to the new Information statement for prospective franchisees published by the ACCC, and to the new Key facts sheet smart form.