On 1 January 2015, the old Franchising Code was repealed and replaced with a new Franchising Code of Conduct(link is external). The new Code applies to conduct on or after 1 January 2015.
The new Code:
introduces an obligation under the Code for parties to act in good faith in their dealings with one another
requires franchisors to provide prospective franchisees with a short information sheet outlining the risks and rewards of franchising
requires franchisors to provide greater transparency in the use of and accounting for money used for marketing and advertising and to set up a separate marketing fund for marketing and advertising fees
requires additional disclosure about the ability of the franchisor and a franchisee to sell online
prohibits franchisors from imposing significant capital expenditure except in limited circumstances.
These are significant changes and it is important that franchisors, franchisees and potential franchises understand their rights and responsibilities under the Code.
