The Australian government recently released its report regarding intended changes to the franchising code of conduct.
Proposed changes to the Franchising Code:
The key changes which are likely to be implemented are:
- The doubling of maximum penalties for poor franchisor behaviour
- Changes to the disclosure requirements, including a requirement for a short form “Key Disclosure Information Fact Sheet”
- Additional dispute resolution options, including binding arbitration and conciliation
- Franchisees will be able to band together in a dispute with the franchisor
- Franchisors will need to give at least 7 days notice before terminating a franchise agreement even in the ‘special circumstances’ (eg. Bankruptcy/liquidation) prescribed by the current code of conduct
- Limitations on the right of a Franchisor to legal costs to Franchisees
By and large, the changes favour the Franchisee and add some costs plus red tape for the Franchisor.
Whether you are a franchisor or a franchisee, contact our corporate & commercial team for guidance in the franchising area.