a u s t r a l i a n f r a n c h i s i n g
give a prospective franchisee or an
Withholding consent: Franchisors are
existing franchisee seeking to renew a
prohibited from unreasonably withholding
franchise agreement, information from
consent to a proposed transfer of a
the franchisor to help the franchisee to
franchised business by the franchisee.
make a reasonably informed decision
about the franchise. Some general
Termination: Except in very limited
guidelines include:
circumstances, termination of a
franchise agreement due to a breach
14 days: Franchisors must give a
of that agreement by the franchisee is
prospective franchisee the Disclosure
not permitted.
Document and a copy of the Code no
less than 14 days before the franchisee
Complaint handling: Franchise
enters into a franchise agreement or
agreements must contain a complaint
pays non-refundable money.
handling and dispute resolution procedure
that complies with the Code.
Written statement: Franchisors
are prohibited from entering into a
The Code: Franchise Agreements must
franchise agreement, or renewing or
not contain provisions that are prohibited
extending a franchise agreement, or
by the Code.
receiving any non-refundable money
unless they have received from the
Setting up in Australia
franchisee or prospective franchisee a
Franchisors will need to review any
written statement.
existing franchise agreements or proposed
franchise agreements that will relate
Note: Franchisors must advise franchisees
to Australia or involve the conduct of a
However, the Australian Government to obtain independent advice from a
business in Australia.
has recently conducted an extensive lawyer, accountant and/or business advisor
review of the Code and the franchising before signing a franchise agreement.
The task of amending a foreign franchise
industry, resulting in a series of
agreement so that it complies with
amendments to the Code, which will Cool-off period: A seven-day cooling off
Australian law is usually not a large or
come into force on 1 March 2008. period will exist for new franchisees.
expensive task.
One such amendment will oblige all Premises: Documents relating to
The process of creating a Disclosure
foreign franchisors having any number occupation of premises must be given to
Document that complies with the Code
of franchisees or master franchisees in the franchisee.
does however involve a degree of
Australia to comply with the Code on
compilation of information by the foreign
and from 1 March 2008. Prohibited: Franchisors cannot induce
franchisor and ultimately proper drafting
franchisees or prospective franchisees not
by an Australian franchising lawyer.
Every foreign franchisor operating in to associate with each other.
the Australian marketplace will be
Foreign franchisors already subject to
required to provide all franchisees Marketing or other co-operative
a disclosure regime in their country
and prospective franchisees with a funds: The operation and
of residence should have the relevant
Disclosure Document and Franchise administration of any marketing or
information at their fingertips.
Agreement that are Code compliant. other co-operative fund is regulated.
Statements of receipts and expenditures
What does a Code compliant must be provided to franchisees.
Disclosure Document and
Tony Garrisson is a principal
Franchise Agreement involve? Ownership and control: There is an and Esther Gutnick is a lawyer in
Franchisors must provide and update obligation to make ongoing disclosure to
the franchising and commercial
this document at least annually franchisees of key events. For example,
division at Mason Sier Turnbull.
For more information contact Tony
within four months of the end of change in majority ownership or control of
on +61 3 8540 0271 or via email at
each financial year. It must set out the franchisor, or certain legal proceedings
tony.garrisson@mst.com.au.
prescribed information designed to and judgments against the franchisor.
Franchisor News | 35
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