New Franchise Code of Conduct

Effective as of 01 January 2015, Australia has a new version of the Franchise Code of Conduct. Like the previous version, this is also mandatory and applies to all franchise agreements.

The new version has some significant changes, including;

• An obligation for parties to act in good faith in all dealings with each other
• The introduction of penalties and infringement notices for serious Code breaches
• The requirement that franchisees be given an information sheet  by the franchisor about franchising risks and rewards
• Except under very limited conditions, franchisors will be prohibited from imposing significant capital expenditure on the franchisee
• The establishment of a separate fund for marketing and advertising fees
• Much more obvious and clear use and accounting of all marketing and advertising funds by franchisors
• Clarification of online selling abilities of both the franchisor and franchisee

Many food businesses are franchise operations, so knowing that there is a new version of the Franchise Code of Conduct is essential for both franchisors and franchisees.

Who and how the new version of the Code will apply is dependent upon the date of each specific franchise agreement.

Even though provisions of the new version of the Code may not be mandatory, dependent upon agreement date, these parts could still be applied from now if agreed by both franchisor and franchisee.

The Franchise Code of Conduct is the responsibility of the Australian Competition and Consumer Commission (ACCC) and can be found at http://www.accc.gov.au/business/industry-codes/franchising-code-of-conduct

The ACCC recommends that each current or prospective party to a franchise agreement discuss the new version of the Franchise Code of Conduct, and their obligations and responsibilities with their franchising solicitor. There is a Deed of Variation for the Code available at the ACCC website and any possible use of this document should also involve the businesses solicitors.

Written by Rachelle Williams, The Green Food Safety Coach.