The Federal Government has moved quickly to implement its
response to the recent parliamentary inquiries concerning
franchising and unconscionable conduct, with amendments to the Code
likely to be announced shortly. It is expected the changes will
take effect from 1 July 2010 to facilitate efficient amendment to
disclosure documents by franchisors with a June 30 financial
The Government has already flagged the nature of the amendments,
with most being procedural or clarifying existing drafting
ambiguity, referencing or formatting. It is expected that the most
important new requirements will be:-
Franchisors will need to include specific information
concerning renewal of the agreement, and end of term
Franchisors will be required to disclose any significant
capital expenditure requirements relating to end of term
Franchisors will need to give a franchisee advanced written
notice (possibly at least six month's in advance) of the
franchisor's decision either to renew or not renew the
Franchisors will be required to disclose the circumstances in
which the franchisor has unilaterally varied a franchise agreement
in the past, and the likely future circumstances in which
unilateral variations may occur.
Additional disclosure will be required in relation to whether
the franchisor will require the franchisee to undertake significant
(and not otherwise undisclosed) capital expenditure during the
Details will need to be provided of any confidentiality
requirements included in the franchise agreement.
The Government rejected calls to include a new statutory good
faith obligation, but it is expected that additional guidelines
will be issued in relation to behaviour when engaging in dispute
resolution under the Code.
In summary, the amendments are likely to be non-contentious and
improve the quality of disclosure to franchisees in the areas of
end of term arrangements, future capital expenditure requirements
and unilateral contract variation in a manner which is pragmatic
and cost-effective. If introduced within the next few weeks the
timing will minimise the additional compliance cost.
When the Government announces the changes a detailed update will
be provided to all of our clients. For more information in the
meantime contact Stephen Giles.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
On 12th November 2016, new laws will commence to protect small businesses from unfair terms in standard form contracts.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).