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All franchise businesses are required by law to comply with the Franchising Code of Conduct (Franchising Code), a mandatory industry code under the Competition and Consumer Act 2010 (formerly the Trade Practices Act 1974).
The Franchising Code regulates the actions of franchising participants and aims to ensure that prospective franchisees are adequately informed about a franchise agreement before entering into it. The Franchising Code also provides a cost-effective dispute resolution scheme for franchisees and franchisors.
While the Franchising Code determines minimum standards of disclosure and conduct, it’s not intended to replace independent legal, business or other advice before entering into a franchise agreement.
As a franchisee, the Franchising Code details:
- your rights
- your obligations
- the information franchisors must disclose to you
- the elements a franchise agreement must contain
- a mediation procedure for disputes.
The Australian Competition and Consumer Commission (ACCC) administers and enforces the Franchising Code as well as educates people of their rights and obligations. It also provides small business information for people buying a franchise, or extending or renewing a franchise agreement.
Changes to the Code
The Franchising Code was amended in 2010. These changes apply to any franchise agreement entered into, renewed, transferred or extended on or after 1 July 2010. Make sure the contract and disclosure document you’re given are compliant with these changes.
See the ACCC website for information on the Franchising Code of Conduct, or phone the ACCC small business helpline on 1300 302 021.
What to do…
- Go to the ACCC website for these helpful resources:
- A copy of the Franchising Code of Conduct
- Overview of the Franchising Code of Conduct fact sheet
- DVD – Your Essential Guide to the Franchising Code of Conduct
- Franchisee start-up checklist
- The franchisee manual
- Franchising page.
- Consult a business adviser, accountant, solicitor or franchise consultant for advice.
- See what information is available on buying a franchise in your state or territory.