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The Franchise Sector Welcomes the Code of Conduct Reforms

Ali Okailey November 8, 2021 0 Comments

The federal government has introduced changes to the Franchise Code of Conduct after consultation with the Franchise Council of Australia (FCA).

The FCA is the franchising sector’s peak industry group. It consulted widely with franchisor and franchisee members as part of the reform process.

The changes take effect from July 1, 2021. Here are some of the main reforms:

  • Franchisors must now provide prospective franchisees with more information before entering into a franchise agreement. This includes a Key Facts Sheet that covers the main points in the disclosure document. However, the facts sheet should not be used in place of the disclosure document – both should be looked at together.
  • Disclosure documents must provide more detail regarding certain matters. This includes information on franchisee disputes, financial benefits for franchisors from suppliers and leasing arrangements (if any), capital expenditure, marketing funds, and early termination options for franchisees.
  • The cooling off period has been extended from seven to 14 days, which means franchisors must provide prospective franchisees the above information at least 14 days before the non-refundable deposit is paid.

The FCA has welcomed the changes. In a Business Franchise Australia and New Zealand report, FCA CEO Mary Aldred said she was “reassured by the federal government’s approach to introducing the changes in the context of today’s economic reality.”

Franchisors will now need to begin updating their disclosure documents and franchise agreements to ensure they comply with the code reforms.

Want to know more? Go to the ACCC website.

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