You need to know the Code if you are a franchisee or franchisor as the penalties are significant.
The New Year brought in changes to the Franchising Code of Conduct. You need to know the Code if you are a franchisee or franchisor as the penalties are significant.
The revised Franchising Code of Conduct applies to all franchise systems and franchisees in Australia. It imposes a 'good faith' obligation on both parties, which means they have to honour their contract, act honestly, and refrain from doing things that would undermine or deny the other party the benefits of the contract.
Other changes include increased disclosure requirements, clarity about whether the franchisee or franchisor can operate online, the transparent use of marketing and advertising funds, and restrictions on the imposition of significant capital expenditure on franchisees.
The Australian Competition and Consumer Commission is empowered to issue infringement notices of $8,500 to body corporates or $1,700 to individuals and other entities, and to seek court penalties of up to $51,000 for serious breaches of certain provisions.
"Rogue operators should be on notice that the ACCC can now seek significant penalties for serious breaches of the Code,” said ACCC Acting Chair Dr Michael Schaper.
"The ACCC will be focusing on particularly serious conduct and, as always, will take a common sense approach to enforcing the Code."