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.