News

A Reminder To Franchisors – Disclosure Document Update Season

30 Aug 2018

Franchisors, the time has come to review and update your Disclosure Document for the financial year ending 30 June 2018.

The Franchising Code of Conduct (the Code) requires franchisors to update their Disclosure Documents within four months of the end of their financial year. For most franchisors, this will mean their Disclosure Documents must be updated by 31 October 2018.

IPSO FACTO CLAUSES: WHAT YOU NEED TO KNOW

On 1 July 2018, new Ipso Facto provisions introduced into the Corporations Act 2001(Cth)(The Act) by the Treasury Laws Amendment (2017 Enterprise Incentives No 2) Act 2017 (Cth) commenced as part of the Federal Government’s insolvency innovation reform packages. The new provisions have altered the contractual rights of parties against insolvent counterparties by imposing a stay on the enforcement of Ipso Facto clauses, preventing the termination of a contract upon the occurrence of certain insolvency events. The new provisions apply to nearly all contracts, agreements and arrangements entered into on or after 1 July 2018. However, some contracts and contractual rights are excluded from the operation of the provisions pursuant to statutory instruments.

Given the infancy of the new regime, many companies are yet to fully grasp the changes or the implications for their businesses and what may be required to protect their commercial interests appropriately. The nature of the changes may alter the way you do business with your customers or contract with your clients, so it is important that you understand both the changes and the measures required to mitigate the potential risks to you and your business.

Unfair Contract Terms Fairly Dealt With

Continuing our commitment to advising and guiding those involved in the franchise industry, MST Lawyers has prepared articles about the introduction of unfair contract terms law for small business. This piece reports on the latest case judgment. Australian Competition and Consumer Commission (ACCC) v Servcorp Limited [2018] FCA 1044 (Servcorp) showcases that the enforcement and compliance of these new laws is a priority for the ACCC and further develops our understanding of what the courts are classifying as unfair contract terms.

Obtaining Injunctions After Termination Of A Contract: The Role of Good Faith

Recently the Supreme Court of Victoria had to determine in Delahunt v Swim Loops Pty Ltd [2018] VSC 269 whether the Franchisees should be granted an injunction to allow them to regain possession and operation of the business while proceedings were before the Court. The Franchisee argued that the Franchisor had terminated their Franchise Agreement in addition to being evicted from the franchise premises.

The Court granted the injunction allowing Mr and Mrs Delahunt back into the business to continue to operate it subject to a resolution of other issues.