The Government has released a draft of proposed changes that aim to improve the Franchising Code of Conduct and now is your chance to provide feedback.
Included in the draft proposals are clause revisions dealing with:
- dispute resolution
- disclosure before entering a franchise agreement
- termination of franchise agreements
- capital expenditure
- marketing and other cooperative funds
- franchisor’s legal costs relating to the franchise agreement
- retrospective unilateral variation of franchise agreements by franchisors
- leasing of premises
- restraint of trade
- application, saving and transitional provisions
- penalty increases
The Government has provided an explanatory document, Supporting guide: Changes to the Franchising Code, Australian Government Department of Industry, Science, Energy and Resources which will guide you through the process.
It asks, for instance, for feedback on which one of three Key Facts Sheets to be part of the disclosure process pre-purchase will be most effective in helping franchise buyers make an informed decision.
A recent survey commissioned by the Franchise Council of Australia and conducted by FRANdata Australia revealed survey respondents overall gave backing for the changes – with one exception.
FRANdata Australia CEO Darryn McAuliffe told Inside Franchise Business Executive, “With the exception of the proposal to double penalties, solid overall support was evidenced for the government’s proposals in response to the Fairness in Franchising Report.”
With the more contentious topic of increased penalties, the Government is aiming to deter poor conduct and improve enforcement of the regulations by doubling penalties for breaching the code from 300 to 600 penalty units ($133,200 from 1 July 2020).
The Government is asking for submissions in response to the draft, which you can read here. Submissions are open until 4 December 2020.
The Franchise Council of Australia is preparing its own response on behalf of its members.
