During a franchise agreement

Franchisors must keep franchisees informed

Franchisors must give franchisees certain information and documents during a franchise agreement.

Franchisors must tell franchisees about:

Changes to the franchise that are materially relevant

During a franchise agreement, franchisors must keep franchisees up to date about certain important information. The Franchising Code of Conduct calls this information materially relevant facts.

Changes in ownership of the franchise

Franchisors should keep franchisees informed if they are selling or leaving the franchise.

A materially relevant fact that franchisors must tell franchisees about is a change in:

• majority ownership, or
• control of the franchisor, an associate of the franchisor, or the franchise system.

If you’re looking for information about what happens at the end of a franchise term, see extending or ending a franchise agreement.

Activity and operations of specific purpose funds

When a franchisee pays into a specific purpose fund, such as a marketing fund, franchisors must give them specific information and documents.

Franchisors must tell franchisees about:

• how they operate the specific purpose fund. This information must be included in the disclosure document
• the money that goes in and out of the specific purpose fund each financial year. This information is given to franchisees in a yearly financial statement.

Franchisors must give franchisees an auditor’s report of the financial statement. If 75% of franchisees paying into the fund agree that an audit is not required, the financial statement does not have to be audited.

Leasing information

Franchisors must give franchisees certain information if they are occupying or leasing premises for their franchise from:

• the franchisor, or
• an associate of the franchisor.

This includes telling the franchisee about any incentives or financial benefits that the franchisor or associate of the franchisor is entitled to because of the lease arrangement.

Franchisors and franchisees must follow the franchise agreement and laws

Franchisors must not engage in misleading or deceptive conduct or unconscionable conduct during the franchise agreement. This also applies to franchisees when dealing with consumers.

Both parties must act in good faith during the franchise agreement.

The franchise agreement must be followed by both parties. The franchisor can’t change the agreement unless the franchise agreement allows it, or the franchisee agrees to the change.

Franchisors must not interfere if franchisees want to associate

The franchisor can’t interfere with franchisees associating with each other. This includes bargaining together. This is a protection that franchisees have under the franchising code.

Two or more franchisees may also want to come together to negotiate with their franchisor about terms, conditions and prices. This is collective bargaining.

Bargaining as a group can risk breaching competition laws. There are different ways that franchisees can get legal protection from the ACCC if they decide that they want bargain together.