Franchising Code of Conduct – are you up-to-date?

A new Franchising Code of Conduct came into effect on 1 January 2015. The new Code introduced some big changes, so whether you’re a franchisor or a franchisee, make sure you understand your rights and responsibilities.

Changes in the new Code

According to the new Code:

• franchisors and franchisees must act in good faith when they deal with each other – this means they must remain loyal to the contract they have both signed

• the Australian Competition and Consumer Commission (ACCC) can issue financial penalties and infringement notices for serious breaches of the Code.

The new Code also states that franchisors:

• must give a short information sheet (outlining the risks and rewards of franchising) to people interested in franchising

• must be more transparent about marketing and advertising costs, and set up a separate fund for marketing and advertising fees

• must give more information about whether the franchisor or franchisee can sell online

• must not force franchisees to spend significant amounts on capital expenses, except in some circumstances.

What to do…

• Read the updated Franchisor Compliance Manual and the Franchisee Manual on the ACCC website.

• Refer to the ACCC’s information about the Franchising Code of Conduct .