NEW PROTECTIONS FOR FRANCHISEES
Amendments have been introduced to the Franchising Code of Conduct
The amendments have been designed to protect small and family businesses in the franchising sector.
The purpose of the Competition and Consumer (Industry Codes—Franchising) Amendment (Fairness in Franchising) Regulations 2021 is to improve the fairness and transparency of the franchising sector.
Franchisees and prospective franchisees will benefit from:
• improvements to pre-entry disclosure requirements including:
– introduction of a new key facts sheet which must be completed by the franchisor and provided to prospective franchisees, along with other disclosure documents to help a franchisee to make an initial assessment about a franchise offer
– an updated information statement that must be given to anyone who expresses interest in buying a franchise to help consider the risks and opportunities associated with franchising
– improvements to the scope of financial disclosure, including requiring additional information relating to goodwill
– more specific disclosure relating to supplier rebates.
• extra dispute resolution options.
• a longer cooling-off period of 14 days, and new cooling-off rights for transfers.
• a prohibition on franchisors passing on certain legal costs.
• a prohibition on franchisors retrospectively and unilaterally varying franchisee agreements.
The Government has also committed to significantly increase penalties for breaches of the Code, and Legislation is currently before the parliament.
For more information on the protection, visit www.accc.gov.au/business/industry-codes