Amendments to the Franchising Code of Conduct
By Raynia Theodore, Principal and Belinda Ozgun, Lawyer
A number of minor amendments to the Competition and Consumer (Industry Codes–Franchising) Regulation 2014 (‘Franchising Code of Conduct’) came into effect from 21 December 2021 and were recently registered on the Federal Register of Legislative Instruments, as Compilation No. 6 of the Franchising Code of Conduct, on 28 January 2022. For a copy of the latest compilation of the Franchising Code of Conduct click here.
The amendments are not significant, but do impact the obligations of Franchisors, as noted below.
What are the amendments?
Clause 4(2) of the Franchising Code of Conduct has been amended to make clear that the term ‘restructuring practitioner’, is as defined in the Corporations Act 2001. The inclusion of this additional term in clause 4(2) is due to the amendments made to clause 17(5) of the Franchising Code of Conduct, which now require a franchisor which becomes a Chapter 5 body corporate to notify its franchisees or prospective franchisees of the name and address of the restructuring practitioner within a reasonable time (but not more than 14 days) of becoming aware of the fact. It is important to note that this obligation is in addition to the existing obligations on franchisors under clause 17 to give notice to franchisees and prospective franchisees of materially relevant facts such as a change in majority ownership or control of the franchisor, a change in the intellectual property or ownership or control of the intellectual property that is material to the franchise system and certain legal proceedings and judgements.
Part 6 of the Franchising Code of Conduct has also been amended to include ‘Division 3 (clause 70)’ in relation to the application of the amendments to clause 17. The effect of this amendment is minor and merely means that the amendment to clause 17 applies on or after the commencement of Schedule 1 of the Treasury Laws Amendment (Corporate Insolvency Reforms Consequential Amendments) Regulations 2021, that is, from 21 December 2021.
What should you do next?
Franchisors should familiarise themselves with the recently registered amendments and in particular, the obligations of clause 17(5) and commence using and handing out to franchisees, whether existing or prospective, Compilation No. 6 of the Franchising Code of Conduct. To comply with clause 9 of the Franchising Code of Conduct, this Compilation of the Franchising Code of Conduct should be provided to franchisees or prospective franchisees together with the Franchisor’s Disclosure Document, Franchise Agreement in the form to be executed, Key Facts Sheet and where required, relevant lease documents.
If you have any queries about the above, please feel free to contact Raynia Theodore or Belinda Ozgun in our Franchising team by email firstname.lastname@example.org or by telephone +613 8540 0200.