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Changes to The Franchising Code Now Apply

On 1 June 2021, the Australian Government released amendments to the Franchising Code of Conduct and a number of these have already begun to apply. A summary of when various key changes take effect is set out below. 

From 2 June 2021: amendments have taken effect regarding dispute resolution which apply to all disputes notified on or after 2 June 2021 (even if the agreement was entered into before that date). The changes mean there are additional dispute resolution options available (such as voluntary arbitration, conciliation, and multi-party alternative dispute resolution), and "rapid" appointment of an alternative dispute resolution (ADR) practitioner/arbitrator is contemplated for certain disputes. The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) will now oversee all dispute resolution advisor functions.

From 1 July 2021: the process that applies in granting a franchise will change as follows:

  • The form of the Information Statement that must be provided to prospective franchisees will change (it must be given before the other required disclosure documents are provided)

  • A new "Key Facts Sheet" must also be given to franchisees (the form of this is yet to be published)

  • Additional information regarding leasing and premises must be given where relevant

  • A longer cooling-off period of 14 days applies and the cooling-off period will only begin on franchisees receiving necessary documentation including, where relevant, the terms of leases or occupancy rights

  • Documents need to be provided in formats requested by the franchisee (electronic and/or hard copy)

  • Capital expenditure requirements must be discussed and appropriately disclosed (unless certain exceptions apply).

From 1 July 2021: franchise agreements entered into, renewed or extended will need to be amended to reflect Franchising Code changes which include:

  • Seven days' notice to be given by franchisors for terminations in special circumstances, with a new prohibition on terminating the agreement for 28 days where there is a dispute 

  • Franchisors being prohibited from passing on certain legal costs

  • New cooling-off rights (including for transfers) and the longer cooling-off period 

  • Retrospective unilateral variations being prohibited without a franchisee's consent

  • Further narrowing of the circumstances in which a restraint can be enforced.

From 1 November 2021: updated disclosure documents must reflect new requirements which include:

  • Additional information that must be disclosed regarding mediations/conciliations/arbitrations that have occurred, leases/property, goodwill, the term, early termination arrangements and capital expenditure 

  • Additional information that is required regarding rebates (including how these are calculated and whether and how these are shared with franchisees)

  • Earnings information, if provided, must be given with the disclosure document. 

Copyright 2022 K & L GatesNational Law Review, Volume XI, Number 155
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About this Author

Anna Trist, Labor, Attorney, Corporate, Australia, KL Gates Law FIrm
Special Counsel

Ms. Trist is a senior corporate and commercial lawyer. Her particular focus is on franchising and licensing arrangements, disputes, and compliance. Ms. Trist's clients include numerous well-known Australian and international companies. She assists them with sensible legal and commercial solutions to franchising issues and general commercial advice. She has worked closely with franchisors, master franchisees and franchisees of almost 250 different franchising systems across a broad spectrum of industries.

Ms. Trist has an in-depth understanding of Australian franchising regulation...

61.3.9640.4381
Chris Nikou, Australia, Labor, Attorney
Practice Area Leader - Corporate & Transactional

Mr. Nikou has acted for major Australian and international companies and works closely with his clients, taking the time to understand their businesses and provide them with sound guidance and advice.

Mr. Nikou has acted in numerous merger and acquisition matters from detailed due diligence enquiries, asset and share sale agreements, joint ventures and contract negotiations. He also provides commercial advice on franchising and intellectual property issues and has been involved in expanding a number of Australia’s best known brand names both locally and overseas.

61.3.9640.4354
Philip Vickery Corporate Lawyer Australia K&L Gates
Partner

Mr. Vickery focuses on mergers and acquisitions transactions including capital raisings as well as franchising and regulatory and corporate advice. He possesses a high level of industry knowledge across a range of sectors including agribusiness, franchising, technology, logistics, mining and health (including dental and medical practices).

His clients benefit from his substantial experience gained from advising multinational, Australian corporates and government entities and agencies on a broad range of matters including divestments, acquisitions, franchising, regulatory issues,...

+61.7.3233.1209
Ayman Guirguis, KL Gates, Australian Competition Lawyer, Consumer Commission attorney
Partner

Mr. Guirguis advises clients on all aspects of antitrust/competition law as well as consumer law.

He has a wealth of experience advising clients on merger clearance, joint ventures and on supply chain arrangements between suppliers and customers.

Mr. Guirguis regularly advises on, and responds to, regulatory investigations by the Australian Competition & Consumer Commission (ACCC) alleging cartel conduct (price fixing, market sharing or bid rigging), including making immunity and leniency applications, competitor...

61-2-9513-2308
Alex Rickarby Commercial Claims Attorney K&L Gates Australia
Partner

Alex Rickarby and his team act for international and domestic clients focusing on the resolution of commercial claims across a range of industries, including oil and gas, mining services, construction, financial products and insurance. He has considerable experience with large scale disputes and with court and arbitration proceedings in various Australian jurisdictions.

Alex advises on complex contractual and equitable disputes, building and construction matters, government inquiries, regulatory prosecutions, tortious disputes, property disputes...

+61.8.9216.0924
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