The Franchising Code of Conduct is a mandatory industry code under the Competition and Consumer Act 2010 that regulates and is applicable to franchisees and franchisors.
Recent Code Changes
There have been a number of recent changes to the Franchising Code of Conduct.
The changes include:
- Penalties have increased and more areas of the Code carry a penalty;
- Information Statement must be provided to prospective franchisees within 7 days; and
- Establishment of Franchise Disclosure Register.
It is important that franchisors be aware of and comply with the changes to the Franchising Code of Conduct. Franchise agreements and franchisor Disclosure Documents should be reviewed and updated to ensure compliance with the Franchising Code of Conduct as amended.
Disclosure Document and Key Facts Sheet Updates
The Franchising Code of Conduct requires Franchisor Disclosure Documents and Key Fact Sheets be updated by 31 October each year and to include updated financial reports and solvency statement.
Franchisors should ensure that their Franchisor Disclosure Document and Key Facts Sheet are reviewed and updated. If they are not, the franchisor risks breaching the law and a court may impose penalties, which may be significant, or the ACCC may issue an infringement notice with a penalty.
Franchise Disclosure Register
The newly established Franchise Disclosure Register is hosted and administered by the Australian Government’s Department of the Treasury. It is publicly accessible and has been established to increase franchisor transparency and franchisee access to disclosure information.
Franchisors are required to register and add disclosure information to the Franchise Disclosure Register by 14 November 2022. This is a mandatory requirement of the Franchising Code of Conduct.
Information franchisors must provide includes the number of franchisees in the system, the states and territories the franchisor operates in, information about payments and costs and the standard term of franchise agreements. Franchisors may also choose to upload their franchise agreement, disclosure document and key facts sheet with private information redacted.
It is important that franchisors are aware of the Franchise Disclosure Register and comply with the Franchising Code of Conduct requirement to register and add disclosure information to it. Non-compliance risks breaching the law and the imposition of financial penalties which may be significant and reputational damage given the public nature of the Franchise Disclosure Register.
It is important for franchisors to be aware of and comply with the Franchising Code of Conduct requirements along with applicable deadlines for doing so.
The team at McMahon Fearnley act for franchisors and franchisees and have the experience and expertise to assist with all elements of franchising.
McMahon Fearnley can assist franchisors by:
- Reviewing and updating Franchisor Disclosure Document and Key Facts Sheets and Franchise Agreements to ensure compliance with the Franchising Code of Conduct.
- Registering and uploading required information to the Franchise Disclosure Register.
- Providing advice about franchisor obligations and the Franchising Code of Conduct generally.
To learn more about how McMahon Fearnley can assist you, get in touch today.
The information contained in this blog post is based on the law at the date of publication. It is of a general nature only and not intended to be legal advice. It is recommended you seek professional advice if you require legal advice or intend to take any action based on the information contained in this blog post.