Plans to amend the Franchising Code of Conduct and Trade Practices Act were announced by the Federal Government on Thursday 5 November. These will include amendments in relation to unconscionable conduct throughout the contracting process, but not a broad and general reference to good faith as recommended by the Joint Committee in December 2008.
In a recent court enforceable undertaking, the Australian Competition and Consumer Commission has indicated that it is cracking down on businesses who seek to avoid complying with the Franchising Code of Conduct by claiming that their agreements are licenses and not franchise agreements.
Restraints found in franchise agreements generally seek to prevent the franchisee, both during and after the term of the franchise agreement, from engaging in a business that competes with the franchised business for a certain period of time and/or from soliciting customers or employees of the franchise system for a period of time. Such restraints are also normally limited to a geographical area.
In the period of more than a decade since it became a mandatory industry code, the Franchising Code of Conduct and the compulsory regulations contained within it, have been the subject of much examination, analysis, criticism and debate within the franchise community.