The review of the Australian Franchising Code of Conduct — key recommendations

On 17 May 2013, The Department of Industry, Innovation, Climate Change, Science Research and Tertiary Education released its report following an independent review of the Franchising Code of Conduct.

The four-month review, conducted by industry expert, Mr Alan Wein, has resulted in 18 recommended changes to the Franchising Code dealing with disclosure, good faith, dispute resolution and the introduction of fines and penalties.

If these recommendations are adopted by the government there could be significant advantages and disadvantages for franchisors. The recommendations of most consequence include: replacing the existing requirement that a foreign or master franchisor provide a long-form disclosure document with a short-form disclosure document; the obligation on franchisors to prepare for prospective franchisees a short standalone statement summarising the key risks; the introduction of penalties for breach of the Franchising Code as well as a general strengthening of the enforcement regime; increased disclosure about online activities; and great rigour will be required regarding marketing funds.

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