To our Franchisor/Franchisee Clients and those interested in franchises
The federal government has set in motion far-ranging changes to franchise law, including introducing a duty to act in good faith and penalties of up to $51,000. The changes are set to be enacted on January 1, 2015.
The draft legislation introduces a general duty on franchisors and franchisees to act in good faith in all their dealings with each other, enables the Australian Competition and Consumer Commission to issue infringement notices of up to $8500 and to seek penalties of up to $51,000 from courts for serious breaches of the Franchise Code of Conduct.
The legislation also aims to improve the disclosure and transparency of marketing funds, online sales arrangements and to provide prospective franchisees with short form, easy to understand, information regarding the risks and rewards of franchising at an early stage before they become emotionally and financially committed.
The changes will also remove unnecessary provisions from the Franchise Code of Conduct to reduce red tape and compliance burdens on business. This red tape reduction for the Franchising Code is estimated to save businesses $8.6 million. The proposed changes are intended to strike a balance between the needs of franchisors and franchisees, noting the unique nature of the relationship between the two.