Thursday, 13 November 2014

At last, the new Franchising Code is here

Franchisors must act fast to comply by January 1

After much anticipation the new Franchising Code of Conduct is now publicly available and is due to commence on 1 January 2015.

While many provisions of the current Code remain in force, there are some new additions including:
  • an obligation for parties to act in good faith
  • penalties and infringement notices for serious infringements of the Code
  • franchisors to provide prospective franchisees with a short information sheet outlining the risks and rewards of franchising
  • franchisors to provide greater transparency in the use of and accounting for marketing funds
  • the requirement for internal complaint handling procedures, and
  • limitations on the enforceability of restraints of trade in certain circumstances at the expiry of the franchise agreement.
Time to comply with the new Code is running out and franchisors will need to move quickly to review and update their current franchise agreements to comply with the new Code by 1 January 2015. 

Fortunately, there is some reprieve for franchisors with current disclosure documents remaining valid until 31 October 2015, at which point they must be updated.

The new Code can be downloaded for free, together with an explanatory statement at the ComLaw website.


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