Following the release of the Fairness in Franchising Report and industry consultation, the Australian government has made some changes to the Franchise Code of Conduct (the Franchise Code).
These will be implemented from 1 July 2021.
At this early stage, it is impossible to assess the full effects that the updates to the Franchise Code will have. However, in the meantime we recommend that franchisors be mindful of five aspects of the update that we believe will be crucial:
1. Cooling-Off Periods
The standard cooling-off period has been increased from within 7 to 14 days of entering into the agreement.
In light of the changes, franchisors should be vigilant regarding their expenditure prior to and during this period as they may be required to refund franchisee fees upon termination.
2. Good Faith Obligations
Good faith obligations may affect the grounds on which franchisors can refuse to accept a termination proposal by a franchisee.
3. Disclosure Obligations
Disclosure is vitally important and may affect the franchisee’s right to terminate, particularly in circumstances where the franchisor or their associate plan to lease or license premises to the franchisee.
4. Passing On Legal Costs
If franchisors want prospective franchisees to cover part of the legal costs associated with entering into the franchise agreement, they will either need to specify a fixed sum in the franchise agreement or incorporate the costs into their overall franchise fee.
5. Dispute Resolution Process
Parties can now opt-in to the arbitration process through their franchise agreements.
For the full rundown of everything you need to know about these impending changes, download our helpful guides to get informed:
If you would like professional advice for your situation, get in contact with the Rouse Lawyers team today.