Franchise Law

Franchise law is primarily governed by the Franchising Code of Conduct and the Competition and Consumer Act 2010 (Cth). These regulations are designed to ensure fair dealings between franchisors and franchisees, promoting transparency, good faith, and disclosure. Below is an overview of the Key Legislation and Regulations.

1. Franchising Code of Conduct:
   • Mandatory Code: The Franchising Code of Conduct is a mandatory industry code under the Competition and Consumer Act 2010.
   • Disclosure Requirements: Franchisors must provide a disclosure document to prospective franchisees, outlining key information about the franchise system, financial details, and any litigation history.
   • Good Faith: Both franchisors and franchisees are required to act in good faith in their dealings with each other.
   • Cooling-Off Period: Franchisees have a 14-day cooling-off period after signing the franchise agreement during which they can terminate the agreement without penalty.
   • Dispute Resolution: The Code provides a framework for resolving disputes between franchisors and franchisees, including mediation and other alternative dispute resolution mechanisms.
2. Competition and Consumer Act 2010 (Cth):
   • This Act underpins the Franchising Code of Conduct and provides broader consumer protection laws that apply to franchising relationships.
   • The Australian Competition and Consumer Commission (ACCC) enforces the Act and the Franchising Code of Conduct.

1. Rights and Obligations:
   • The franchise agreement outlines the rights and obligations of both the franchisor and the franchisee, including operational guidelines, marketing requirements, and training provisions.
2. Fees and Payments:
   • The agreement specifies the initial franchise fee, ongoing royalties, advertising contributions, and any other payments required by the franchisee.
3. Term and Renewal:
   • The duration of the franchise agreement, conditions for renewal, and termination clauses are detailed in the agreement.
4. Territory:
   • The geographical area within which the franchisee can operate is often specified, along with any exclusivity rights.
5. Intellectual Property:
   • The franchisee is granted the right to use the franchisor’s trademarks, logos, and other intellectual property.
6. Support and Training:
   • The franchisor typically provides initial and ongoing training, as well as operational support to the franchisee.

Franchise law, governed by the Franchising Code of Conduct and the Competition and Consumer Act 2010, sets out clear guidelines for the operation of franchise businesses. Compliance with these regulations is crucial for maintaining fair and transparent franchising relationships. Should you be a franchisor or franchisee and need advice to navigate the complexities of franchising, contact Buckley Lawyers today on (02) 9220 1737.