Australia: Franchising Code Of Conduct - Mandatory Changes In Force From 1 March 2008

Last Updated: 19 February 2008
Article by Ashleigh Fehrenbach

The assistance of Robin King, Solicitor in writing this article is appreciated


Franchising in Australia is a successful $130 billion industry, providing employment for more than 600,000 Australians.

The Franchising Code of Conduct ("Code") is a mandatory code made under the Trade Practices Act 1974 (Cth)) ("TPA"). The Code governs the relationship between franchisors and franchisees, in particular in relation to:

  1. the disclosure obligations of franchisors to franchisees;
  2. the conditions of a franchise agreement; and
  3. resolving disputes between franchisors and franchisees.

Executive Summary

Following a recent government review and consultation with industry, amendments have been made to the Code which will impact materially on the conduct of franchises. The changes come into force on 1 March 2008.

Many of the changes made to the Code streamline existing requirements. However, in some cases, they add to the regulatory burden imposed on franchisors and will result in further information considered relevant to the conduct of the franchise being disclosed to franchisees.

Changes To The Code

A brief summary of the amendments to the Code is set out below.

  1. Requirement to include a complete copy of the Franchise Agreement with the Disclosure Document.

    This "best practice" will be mandatory.

  2. Requirement to include copies of all associated agreements and contracts with the Disclosure Document.

    All documents which are required to be signed by a franchisee must be made available to the franchisee at least 14 days before signing the franchise agreement. Where documents are not available at that time, those documents must be provided when they become available.

  3. Disclosure of Section 87B Undertakings

    The Government was of the opinion that timely knowledge of the existence and content of s87B undertakings impacts materially on the ability of franchisees to make informed decisions.

    As such, the Code will require that details of any Section 87B TPA undertakings given in connection with the relevant franchise by the franchisor to the Australian Competition and Consumer Commission ("ACCC") should be disclosed to the franchisee not more than 14 days after the undertaking is given.

  4. Rebates and other financial benefits

    The obligation on franchisors to disclose whether the franchisor or an associate of the franchisor will receive a rebate or other financial benefit from the supply of goods and services to a franchisee will also require disclosure of the name of the business providing the rebate or financial benefit and whether any rebate or financial benefit is shared, directly or indirectly, with franchisees.

  5. Auditing of marketing and other co operative funds

    The Code will require mandatory preparation of financial statements for marketing and other co-operative funds by franchisors. Each franchisee is to be provided with a full account of the funds together with auditors' reports.

  6. Information about past Franchises

    Franchisors will be obliged to provide details of names, location and contact details (where the franchisee's consent has not been withheld and where that information is available to the franchisor) of past franchisees.

  7. Short form disclosure

    The opt-out provision for short form disclosure in Part 2 clause 6C of the Code has been removed. The Government was of the view that all disclosure information in Annexure 1 of the Code is of potential importance to franchisees and should be provided, if requested.

  8. Disclosure of materially relevant facts

    The Code will require that all materially relevant facts should be communicated to franchisees within 14 days from the date the franchisor becomes aware of the facts. This requirement seeks to ensure that franchisees are provided with timely disclosure of information which is materially relevant to the operation of their franchise.

  9. Removal of "one franchise" exemption

    The Code will no longer provide exemption for franchisors not resident, domiciled or incorporated in Australia with one franchise only in Australia. The Government was of the view that the Code should apply uniformly to all franchise systems operating in Australia.

  10. Directors of Franchisor to disclose details of proceedings and convictions

    The Code will require details of proceedings involving directors of the franchisor, as well as criminal convictions for non serious offences committed by directors of the franchisor, to be disclosed to franchisees.

  11. The right of unilateral change or termination of a Franchise Agreement

    Section 51AC of the TPA, which deals with unconscionable conduct in business transactions, was amended in September 2007 to reflect that a right to unilaterally vary a contract is now a factor that a court may consider in determining unconscionable conduct.

  12. Financial details

    The obligation on franchisors to include financial reports for the last two financial years with the disclosure document will be extended to include financial reports for any consolidated entity to which the franchisor belongs.

  13. Standardisation of the audit period

    The audit period referred to in Part 2 clause 6(1) of the Code has been changed to align with the audit period stipulated in the Corporations Act 2001 (Cth). A franchisor must now create a disclosure document within 4 months after the end of each financial year.

  14. Details and history of the territory or site to be franchised

    It will be mandatory that this information be contained in a separate document to be provided with the disclosure document.

  15. Copy of the Code to be attached to the disclosure document

    A copy of the Code must be attached to the disclosure document.

  16. Disclosure document to be given to Franchisees upon extension of the scope or term of a Franchise Agreement

    A current disclosure document must be provided whenever there is an extension of either the scope or term of a Franchise Agreement.

In addition, a number of other technical or minor amendments will be made to the Code.


From 1 March 2008, the changes will cause the Code to have broader application to cover most franchises, including certain franchises that were not covered prior to 1 March 2008. For franchises existing prior to 1 March 2008, the changes will need to be reviewed closely to ensure continued compliance with the Code in respect of the additional obligations from 1 March 2008.

However, as no change has been recommended to the scope of a "franchise agreement" to which the Code will apply, many organisations involved in the promotion, supply and sale of branded products will continue to fall outside the scope of the Code. Of course, care will still need to be taken to ensure that trade marks licences, distributorships, multi-level marketing organisations and commissioned agency agreements do not fall within the scope of the Code.

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

Click to Login as an existing user or Register so you can print this article.

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”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.