Franchising Law Reforms in Australia

• In certain circumstances, franchisor must provide a ‘key facts sheet’ to the prospective franchisee, in addition to the disclosure document, at least 14 days before they:
  • enter into a franchise agreement or make a non-refundable payment;
  • give consent to a transfer of existing franchise agreement to themselves; or
  • renew or extend a franchise agreement.
• Additional information required in disclosure documents:
  • the percentage of franchises that participated in an alternative dispute resolution process or arbitration in the previous financial year
  • more detail around rebates and other financial benefits that franchisors receive from suppliers
  • whether the franchisor or an associate has an interest in a lease that will be used for the operation of the franchised business
  • whether the franchise agreement provides for the arbitration of disputes using the Code’s arbitration provisions
  • the ways in which the franchisee and the franchisor can terminate the agreement early
  • franchisees’ rights to any goodwill they generated
  • any restraint of trade obligations.
• There are now more alternative dispute resolution (ADR) options available, including conciliation, voluntary arbitration, and mediation.
• The cooling-off period has been changed from being 7 days to 14 days.
• The franchisor can require the franchisee to pay a fixed amount for legal costs which must be specified in the franchise agreement. However, the franchisor cannot require the franchisee to pay legal costs in relation to preparing, negotiating, or executing other documents after the agreement is entered into.

For further information please visit https://www.accc.gov.au/business/industry-codes/franchising-code-of-conduct/changes-to-the-franchising-code-of-conduct-july-2021.