Franchise
6. Regulation of Franchises
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 27 Jul 2015
- Franchising is regulated at the national level in Australia and the obligations imposed can be both heavy and strict.
- The Franchise Code of Conduct ('the Code') is the main document governing those people who wish to enter into a franchising relationship. The Code is established under the Competition and Consumer Act 2010 and is administered by the Australian Competition and Consumer Commission (ACCC).
- The Code sets out the rights and obligations of both franchisees and franchisors. It is important that you understand the extent of your obligations before deciding whether a franchise is the right business option for you.
- The Code contains provisions that govern the relationship between franchisee and franchisor so each party is protected at every step of the franchising arrangement.
- There are four main areas covered in the Code.
- Preliminary: this section states who the code applies to and defines the key terms used under the code.
- Disclosure: this section sets out the information that a franchisor must provide to a franchisee before entering into any franchise agreement.
- Conditions of the franchise agreement: this section lists the requirements for information that must be contained in all franchise agreements including in relation to transfer, termination and the renewal of any franchise agreement.
- Resolving disputes: this section sets out the process for dealing with disputes including mediation for when disputes arise.
- The legal regulatory framework surrounding franchises has been reviewed many times since the 1970s. The most recent Government review occurred in 2013 and subsequent changes to the Code took effect on 1 January 2015. The majority of obligations in the new Code will apply to all franchise agreements entered into on or after 1 October 1998. Other specific provisions only apply to agreements entered into on or after 1 January 2015.
- If you are considering purchasing a franchise or establishing a franchise from your own successful business you should keep up to date with these changes.
- More information about the changes can be located at https://www.accc.gov.au/business/industry-codes/franchising-code-of-conduct.
View more Information on Business & Company