The Franchising Code of Conduct is the only specific legislation to regulate the franchise sector in Australia.
The purpose of the Franchising Code of Conduct is to regulate the conduct of participants in the franchise sector toward one another. It covers three key areas:
- Pro-forma disclosure for all franchisors
- Requirements of franchise agreements
- Dispute resolution procedures for franchisees and franchisors
Under the Code, franchisors are not required to pre-register with any statutory authority prior to franchising, but are expected to be operating in compliance with the Code at all times.
A breach of the Code is a breach of the Competition and Consumer Act and therefore punishable by the remedies available under the Act.
Business owners considering franchising their businesses are urged to get advice from experienced franchise consultants, as well as experienced franchise lawyers and accountants.
The specific nature of the Franchising Code, and the cost of non-compliance, is such that franchise business owners and franchisors are encouraged to only deal with business, legal and accounting advisors with demonstrated franchising experience and expertise.
The Franchising Code was the first national standard regulations of its kind in the world when introduced in July 1998.
It has been amended three times since its introduction – once in 2001 to update some minor technical considerations, again in March 2008 when changes to franchise disclosure requirements were introduced, and the most recent reforms in 2010.