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New Franchising Code Now Available

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By Ryan Attard, Law Clerk and Alicia Hill, Principal

A new compiled version of the Franchising Code (the Code) is now available on the Federal Register of Legislation. All franchisors should be providing this updated version of the Code to prospective franchisees as part of disclosure prior to finalising a franchise agreement.

Prospective franchisees should receive from franchisors the following documents 14 days before any agreement is signed or non-refundable payment is made at least:

  • The new version of the Code;
  • Their current disclosure document; and
  • An executable version of the franchise agreement.

Changes to the Code include:

  • New vehicle dealership changes that commenced 1 June 2020; and
  • Increases to penalty units.

As of 1 July 2020, penalties under the Franchising Code have increased from $210 per penalty unit to $222. This means that breaches of the Code can result in penalties up to $66,600 (300 penalty units), with infringement notices of $11,100 (50 units) for bodies corporate and $2,200 (10 units) for individuals and other entities.

Penalties under the ACL still remain at a minimum of $10 million for corporations and $500,000 for individuals. All franchisees as Australian traders are subject to the ACL and all penalties that can be issued for non-compliance.

The new compilation can be viewed at this link.

If anyone has any queries regarding when or how this new Code should be utilised please contact Alicia Hill on (03) 8540 0292, Raynia Theodore on (03) 8540 0242 or Louise Wolf on (03) 8540 0273.