e x pert a dv i c e
Imminent changes coming to the
Franchising Code of Conduct and Franchisor Disclosure Obligations The Fairness in Franchising report (‘Report’), released by the Parliamentary Joint Committee on Corporations and Financial Services in 2019, was forthcoming in its findings and recommendations. Among other things, it suggested that the current regulatory environment did “not
deter systemic poor conduct and exploitative behaviour and has entrenched the power imbalance” between franchisors and franchisees. The recommended action for the Government was to provide a framework for industry codes to support regulatory compliance, enforcement and appropriate consistency. In response, the Australian Government’s Franchising Taskforce (‘Taskforce’) released the Competition and Consumer (Industry Codes – Franchising) Amendment (Fairness in Franchising) Regulations (‘Exposure Draft’) in late 2020, which proposed additional
26 Business Franchise Australia and New Zealand
disclosure obligations under a revised Franchising Code of Conduct (‘Code’). The first principle identified by the Taskforce for fair and effective regulation in this area was that “prospective franchisees should be able to make reasonable, informed assessments of the value (including costs, obligations, benefits and risks) of a franchise before entering into a contract with a franchisor.” Accordingly, the Exposure Draft proposed the following changes to the Code focused on disclosure obligations for franchisors, which if passed by Parliament will come into effect from 1 July 2021.
