Our alert on 8 June 2021– https://kubedlegal.com.au/franchising-code-of-conduct-important-changes-to-the-new-code-from-2-june-2021/– summarised extensive changes to the Franchising Code of Conduct (Code) released by the Australian Government on 1 June 2021. Many of which will come into effect next month and are designed at better balancing the rights of franchisees and franchisors in the $150 billion + franchising industry.
Two weeks on, according to feedback from the Franchise Advisory Centre and the Franchising Council of Australia, the industry is struggling to fully understand these changes and when they should be implemented.
The confusion is not surprising.
For example, from 1 July 2021 franchisors must give prospective franchisees a key facts sheet. Mandatory sections of the key facts sheet must be completed by the franchisor. It must be given at least 14 days before anyone enters into a franchise agreement or pays any non-refundable money. It must also be given to those acquiring a business from an existing franchisee at least 14 days before the franchisor consents to the transfer/re-sale.
However, the template for the sheet is yet to be published on the ACCC website.
An updated version of the new Code (with all the changes included) is also not available online yet. The latest version is dated 15 December 2020 and does not contain the recent reforms. The reforms can, however, be accessed in the Regulations via this link: Competition and Consumer (Industry Codes—Franchising) Amendment (Fairness in Franchising) Regulations 2021.
Little changes to the Code have been announced by the media either. This is somewhat ironic after wide-spread negative media coverage on the pitfalls of the industry occurred after a string of high-profile franchising scandals. This coverage was both before and after the 2018 joint Parliamentary Franchise Inquiry, which led to these latest overhauls 3 years later.
So, where to from here?
To reduce any risk of non-compliance, disclosure documents could be updated to the new standard from 1 July 2021. With the end of financial year fast approaching, this could be difficult for many to achieve and an unnecessary cost if resales, assignments and new franchise grants are not on the immediate radar.
On 13 July 2021, a 4-part online and interactive series will be held by the Franchise Advisory Centre. A panel of representatives from the ACCC and the franchise sector will explore the changes and challenges created by the new Code. Expert insights and interactive group discussion will also occur. Registration fees apply. You can book your place at this session here: https://www.franchiseadvice.com.au/franchise-management-forum/.
Further updates from the team at Kubed Legal will follow.
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