Franchising

The Federal Government as part of the Franchising Code review has amended the Trade Practices (Industry Codes – Franchising Amendment Regulations 2007 (no.1)) which regulations take effect from 1 March 2008.  These Code changes were as a result of a review of the Disclosure provisions undertaken by the Mathew’s Committee as part of the ongoing review of the Franchising Code by the Federal Government.

It is important that all Franchisors be aware of these changes and the impact upon Franchise Agreements, initial procedures and the Disclosure Statements that are required to be made available to any prospective Franchisee or an existing Franchisee who requests a Disclosure.  It is up to each Franchisor to ensure that such Disclosure is current and contains all required information.

Following the changes all Franchisors will need to update and adjust the layout of the Franchise Disclosure document to comply with the new regulations and to ensure that their procedures for provision of the new Franchise and related documents will be in accordance with these amendments.

The existing Franchise Disclosure documents (if in conformity with the regulations pre 1 March 2008) will be the disclosure to be utilised up to 1 March 2008 and on and from 1 March 2008 new Disclosure documents will need to be made available.

One important new aspect is that there is a twenty-one (21) day cool-off period after the Franchise Agreement has been entered into although we understand there are representations being made to the Government on this and other points which might shorten this period and result in other changes.

Also, disclosure of materially relevant facts by the Franchisor is to be provided within fourteen (14) days rather than what was sixty (60) days under the earliest provisions.

For further information contact Michael Webb.