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Franchising Code of Conduct

 

Franchising Code of Conduct

Franchising is a significant part of the Australian business scene and a valuable contributor to our economy. The franchising sector in Australia is governed by the Franchising Code of Conduct, which has regulated the ongoing relationship between the franchisee and franchisor since July 1998. The Code provides a minimum standard of disclosure and conduct for both franchisors and franchisees. The Australian Competition and Consumer Commission (ACCC) administers the code, which is enforceable under Australian consumer laws. The code applies to all franchise agreements and regulates the conduct of all participants in franchising.

Whether you are a new or existing franchisor or franchisee, before embarking on the franchise, it is important to know and understand your rights and responsibilities under the code. The code creates rights for prospective or existing franchisees to ensure sufficient information is given about the franchise before entering into any agreements. Under the code, the franchisor must provide a franchise with a:

  • Copy of the code 

  • Disclosure document 

  • Copy of the franchise agreements in its final form. 

This must be done at least 14 days before a franchise agreement, non-refundable payment or adjustment to the agreement has been entered into or made.

Disclosure Document

A franchisor must present you with all relevant information about the franchise, so you can make an informed decision about buying the business. Most franchisors will give you a long form disclosure document, however if given a short form disclosure document, you have a right to request additional information in long form.

Disclosure documents must include a range of vital information including:

  • Information about your leasing requirements 

  • Information about the franchisor, including the business experience of the people running the franchise 

  • Details of certain legal proceedings against the franchisor or its directors 

  • A directors statement that the franchisor is able to meet its debts, and either

– Financial reports of the past two years
– Independent audit to support the director’s statements. 

Seeking Advice

A franchisee must provide a signed statement to the franchisor that they have received advice from an independent legal advisor, accountant and/or business about the proposed agreement.

Cooling Off Period

You may terminate an agreement within 7 days of entering into an agreement or making any payments under it, whichever one happens first. When this happens, the franchisor must refund all payments within 14 days, minus any reasonable expenses provided for in the agreements.

If you’d like more information or if you would like to discuss whether buying a franchising suits you. Please complete and submit the Express Enquiry form on the top right hand side of this page and we will contact you to discuss your enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment.