Franchising Code of Conduct Review

The Government has released a Report of a review of the disclosure provisions of the Franchising Code of Conduct and the Government Response to the Report.

The Australian Government has accepted 31 of the 34 recommendations of the Review
of the Disclosure Provisions of the Franchising Code of Conduct.

Under the reforms, prospective franchisees will be
able to contact past franchisees to ask about a franchisor.

Other recommendations agreed by the Government to improve information available to franchisees include:

  • provision to franchisees of audit reports of franchise marketing funds;
  • a requirement for franchisors to report to their franchisees a
    material change in the circumstances of the franchise within 14
    days rather than the present 60 days.

The Government rejected recommendations that disclosure documents be registered and reviewed by ACCC, that franchisors provide risk statements and that ACCC monitor whether financial statements are audited. It also decided that a recommendation for a unilateral right of termination or variation by a franchisor should be covered by an amendment to section 51AC of the Trade Practices Act 1974.

UPDATE 19 August 2007: Amendments tabled

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