Franchising Code of Conduct

Franchising Code of Conduct


The Franchising Code of Conduct attempts to enhance Franchisee rights.

Franchisees have had enhanced support under the Franchise Code of Conduct since 2015:

1. Franchisors must provide a short information for sheet to intending franchisees which gives an overview of the risks and benefits of Franchising.  The statement will include information about:

2. Online trading of the Franchisor must be disclosed

3. Franchisors must remind franchisees of their entitlement to a current disclosure document.

4. The franchisor must if the Franchisee does not hold the lease, provide details of any incentives.

Marketing Funds

Balance of Power between Franchisees and Franchisors

1. Franchisors must not impose significant capital expenditure upon franchisees unless:

2. It is not possible to require a franchisee to pay the franchisors costs associated with the dispute resolution process, nor may a franchisor require any dispute resolution to take place outside the state in which the franchisee operates.

3. Franchisors must not impose unreasonable restraints on Franchisees. Prior to the implementation of these changes in 2015 a franchisee might have been prevented from benefiting from the good will which the franchisee helped to create. The door will now be opened to the possibility of a franchisee operating a similar business after the end of the franchise agreement.   Franchisors should consider strategies  to assist protect the good will of their franchise system.

4. Corporate Stores and Operations of the Franchisor cannot benefit from the Marketing fund unless they are contributing to that fund.

5. An obligation of good faith is imposed upon both parties to the Franchise Agreement.

6. The consequences of a serious breach of the Code may result in large fines in the tens of thousands of dollars

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