Australia's
federal parliament has agreed to amend the
Franchising Code of Conduct (the "Code") which
regulates franchising within Australia. The
amendments will take effect from the 1st March
2008.
Probably the most
significant change for foreign franchisors is that
there will no longer be an exemption from the Code
for those granting only a single franchise or
master franchise in Australia. This means
that from March 1 2008 all foreign franchisors
will have to comply with the amended Code
requirements, such as the requirement to provide
their franchisees with an annual disclosure
document within 4 months of the end of each
financial year.
Most
of the other amendments to the Code require
franchisors to provide additional information or
documentation to their franchisees. Some of
the most significant examples are:
-
franchisors must
provide their franchisees with a copy of their
franchise agreement in the form it is intended
to be signed (not just in their template form
prior to amending it) 14 days prior to
execution;
-
at
the same time franchisors must also provide
their franchisees with all other documents
relating to their franchise agreement such as
any related leases, confidentiality agreements,
guarantee documents or other
documentation;
-
franchisors must
provide their franchisees with ongoing
disclosure of materially relevant information
throughout the franchise term within 14 days of
any relevant decisions or events (this was
previously 60 days); and
-
franchisors with
marketing funds paid for by
their franchisees must now provide annual
audited accounts of such marketing funds to
those franchisees unless 75% of those
franchisees agree not to receive such
accounts.
In
addition, the amendments to the Code require the
disclosure documents that franchisors provide to
their franchisees to include new information such
as the contact details of all franchisees that
have left the franchise network for any reason in
the last 3 years.
These
amendments to the Code will mean current
franchisors granting rights in Australia will need
to update their documentation prior to the 1 March
2008 deadline. If you wish to discuss any
amendments to your current documentation or
discuss franchising in Australia in general then
please contact Mark Abell or
Babette
Märzheuser-Wood.