Franchising code of conduct

The ACCC regulates the Franchising Code of Conduct, which is a mandatory industry code that applies to the parties to a franchise agreement.

Franchising code of conduct

From 1 January 2015, the current Franchising Code will be repealed and replaced with a new Franchising Code of Conduct. The new Code will apply to conduct on or after 1 January 2015.

The new Code will:

  • introduce an obligation under the Code for parties to act in good faith in their dealings with one another
  • introduce financial penalties and infringement notices for serious breaches of the Code
  • require franchisors to provide prospective franchisees with a short information sheet outlining the risks and rewards of franchising
  • require franchisors to provide greater transparency in the use of and accounting for money used for marketing and advertising and to set up a separate marketing fund for marketing and advertising fees
  • require additional disclosure about the ability of the franchisor and a franchisee to sell online
  • prohibit franchisors from imposing significant capital expenditure except in limited circumstances.

These are significant changes and it is important that franchisors, franchisees and potential franchises understand their rights and responsibilities under the new Code.

For further information about the changes to the Code, please see the updated Franchisor Compliance Manual and the Franchisee Manual.

The Code explanatory materials are available from the ComLaw website.

Application of the code

The new Code will impose one set of obligations to all franchise agreements entered into, renewed, extended or transferred on or after 1 October 1998. However, a small number of Code provisions will not apply to agreements entered into prior to 1 January 2015.

If the agreement was entered into:

The following will not apply:

Between 1 July 1998 and 29 February 2008

  • waiver of verbal or written representations by the franchisor (cl 20(1)(b))
  • prohibition on requiring actions or proceedings, including mediation, to be being brought in a State or Territory outside that in which the franchisee operates  (cl 21(2))
  • costs of settling disputes (cl 22)
  • effect of restraint of trade clauses (cl 23).

Between 1 March 2008 and 31 December 2014

  • prohibition on requiring actions or proceedings, including mediation, to be being brought in a State or Territory outside that in which the franchisee operates  (cl 21(2))
  • costs of settling disputes (cl 22)
  • effect of restraint of trade clauses (cl 23).

Importantly, a franchise agreement entered into prior to 1 January 2015 will be covered by the entire Code (including the provisions in the table above) if the agreement is renewed, transferred or varied in any way on or after 1 January 2015.

If you are uncertain about your rights and obligations under the new Code, you should consider seeking legal advice from a solicitor with franchising expertise.

Franchisors that are not required by the Code to comply with the provisions referred to above may, however, agree with their franchisees to be bound by those provisions.

The ACCC has developed a deed of variation which can be signed by a franchisor and a franchisee to ensure all the rights and obligations under the Code apply to the franchise agreement, regardless of when they entered into their agreements. Parties should seek independent legal advice prior to signing the deed of variation.

Deed of variation [ pdf (100.85 KB) | docx (34.51 KB) ]

Franchising investigations

The ACCC investigates alleged breaches of the Franchising Code or the Competition and Consumer Act 2010 and can take enforcement action where appropriate. This role does not extend to the investigation of disputes where there is only a contractual issue involved. See franchising investigations for information on the remedies, investigation process and actions taken by the ACCC.

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Related publications

The franchisee manual
Franchisor compliance manual
Find more in our publications section

More information

Franchising
Franchising investigations
ACCC industry code audits
Franchising Code frequently asked questions