PROPOSED CHANGES TO THE FRANCHISING CODE
The Government issued its response to the inquiry into the operation and effectiveness of the Franchising Code of Conduct report on 20 August 2020.
The Government examined the feasibility of a number of the recommendations made in the Report.
The Government recognised the importance of the franchising sector to the economy as a source of jobs and growth and supported the finding that action is needed to improve fairness and transparency for franchisees.
However, a number of recommendations made in the Report will not be adopted so as to avoid unnecessary red tape.
Interestingly, the Opposition introduced a Bill into the senate on 2 September 2020. The Bill focuses on introducing arbitration into the dispute resolution process but also proposes further increases to penalties for breaching the Franchising Code of Conduct.
Until the changes are made final it is hard to say whether all of the proposed reforms in the Response will be made and what this means from a practical perspective. The Government has not announced its timing for introducing its amendments to the Franchising Code. It is expected to occur later this year or early next year. The Opposition Bill may impact this timing.
GOVERNMENT RESPONSE AND KEY CHANGES
KEY DISCLOSURE INFORMATION FACT SHEET
- Require a franchisor to prepare and give to a prospective franchisee a Key Disclosure Information Fact Sheet containing prescribed financial and other information. This may be for a new (greenfield) franchise or an existing franchise.
- Require a disclosure document to be made available both in electronic and hardcopy form.
- To clarify that the Information Statement (Annexure 2 to the Franchising Code) must be provided to prospective franchisees separately and prior to providing the disclosure ...