From 1 July 2021, changes to the Franchising Code of Conduct will be rolled out to address the perceived power imbalance between franchisors and franchisees. The amendments follow the Parliamentary Joint Committee report which outlined issues with non-compliance, false and misleading representations and unconscionable conduct on the part of franchisors. After extensive consultation, the Committee reached a general consensus that reform was required to restore confidence in the industry and improve fairness for franchisees.
Key changes include:
- increased disclosure obligations for franchisors;
- limit on capital expenditure;
- strengthened dispute resolution mechanisms;
- an extended cooling-off period; and
- more lenient procedure for terminating franchise agreements
In her first article since joining the firm, Mahoneys commercial lawyer Sabrina Austin discusses the changes in more detail and what they mean for franchisees and franchisors – especially as the amendments will have implications for both, who will need to be aware of their obligations under the new Code of Conduct to avoid facing penalties for non-compliance.
If you would like further information as to how these changes may affect you or your franchise agreement, please contact our franchising team – which consists of Sabrina and Antony Harrison (the partner who heads up Mahoneys commercial group).