What is the Franchising Code of Conduct and what does it require in Australia?
The Franchising Code of Conduct is a mandatory industry code under the Competition and Consumer Act 2010, administered by the ACCC. It sets minimum standards for franchise agreements in Australia including disclosure obligations, cooling-off periods, good faith obligations, dispute resolution processes, and restrictions on the franchisor's ability to terminate or not renew agreements.
What disclosure must a franchisor provide before I sign a franchise agreement in Australia?
Franchisors must give you a disclosure document at least 14 days before you sign a franchise agreement or pay any non-refundable money. The disclosure document must include financial information, details about existing franchisees, litigation history, marketing fund information, and key terms of the proposed agreement. Failure to provide adequate disclosure is a breach of the Code.
What is the cooling-off period for franchise agreements in Australia?
You have a seven-day cooling-off period after signing a franchise agreement or paying any non-refundable deposit. During this period you can withdraw from the agreement and receive a refund of any money paid, less reasonable expenses the franchisor has actually incurred. The cooling-off right cannot be waived by contract.
What are good faith obligations in Australian franchise law?
The Franchising Code of Conduct imposes good faith obligations on both parties when entering into, performing, and ending a franchise agreement. Good faith means acting honestly and cooperatively, having regard to the interests of the other party, and not acting to undermine the legitimate expectations of the other party. Breaching the good faith obligation can be the basis for a franchise dispute.
What is the dispute resolution process under the Franchising Code of Conduct in Australia?
The Code requires a structured dispute resolution process. You must first notify the other party in writing, specifying the dispute. If not resolved within three weeks, either party can refer the dispute to mediation with a mediator from the Office of the Franchising Mediation Adviser (OFMA) or any other agreed mediator. Mediation is mandatory before court proceedings for most franchise disputes.
What does the ACCC do about franchise disputes in Australia?
The ACCC enforces the Franchising Code of Conduct and can take action against franchisors who breach the Code. If you believe a franchisor has breached their disclosure obligations, acted unconscionably, or engaged in misleading conduct, you can lodge a complaint with the ACCC at accc.gov.au. The ACCC investigates and can seek pecuniary penalties and injunctions.
Can a franchisor terminate my franchise agreement without cause in Australia?
No. The Franchising Code of Conduct restricts a franchisor from terminating a franchise agreement without first following the Code's dispute resolution process, except in limited circumstances such as fraud or insolvency. The Code also restricts franchisors from exercising rights in a way that is capricious or unconscionable. You can challenge unlawful termination through the Code's dispute process.
What happens if a franchisor does not renew my franchise agreement in Australia?
The Franchising Code requires franchisors to give franchisees at least six months notice before the end of the franchise term if the agreement will not be renewed. If the franchisor decides not to renew, the franchisee may be entitled to compensation for certain costs in some circumstances. The non-renewal of a franchise can be subject to the Code's dispute resolution process.
Are there free resources to help franchisees in Australia?
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) provides free assistance to small business owners including franchisees in disputes. The Franchise Council of Australia also provides member resources. Community legal centres and some law firms offer free initial advice. The ACCC website has comprehensive guidance on franchisee rights under the Code.
How does uplaw.ai help with franchise disputes in Australia?
Tell us your franchise arrangement, what the franchisor has done, and what stage the dispute is at. We help you understand your rights under the Franchising Code of Conduct, prepare your formal dispute notification, and understand the mediation process under the Code.
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