Changes to the Franchising Code of Conduct – Get Ready now.
By Michael Fetter
8 April 2014
In an announcement by the Government in the last few days and following on from the Alan Wein report, there will be amendments made to the Franchising Code of Conduct and the Competition and Consumer Act 2010.
In particular, Franchisors will need to review their current documentation and consider whether certain terms contained within them will be unenforceable when the new franchising code comes in force.
As part of the reform, the ACCC will have greater powers to issue infringements for breaches of the Code of Conduct including $8,500 infringement notices and penalties of up to $51,000 if proceedings are issued in the Court.
Those Franchises with marketing funds will also be affected as the reforms aim to make funds more transparent.
The changes will introduce a general duty on franchisors and franchisees to act in good faith during their dealings with each other which will reinforce the general common law duties.
The short form disclosure statement which is for Franchisees with expected annual turnover of $50,000 or less will also be removed.
The changes are expected to take effect from 1 January 2015.
Franchisors must update their Disclosure Documents annually and must ensure that their Franchise Agreements are lawful at all times.
If you are a Franchisor who needs assistance with compliance issues or if your documents have not been reviewed for some time, now is the time to contact a solicitor.