The Code does not provide a franchisee with an automatic right to transfer their franchise agreement to a third party. What the Code does is provide a process by which a franchisee may seek your consent to a transfer.
Record-keeping is necessary to both monitor, and provide evidence of, compliance with the Code and any other applicable legislation. Under the Code you are required to generate or publish certain documents such as disclosure documents, franchise agreements and marketing fund statements.
In addition, if the Code requires, or allows, a franchisee or prospective franchisee to give something to you in writing, you are required to keep this type of document or a copy of it. This includes any documents provided electronically. For example, you must keep the following documents:
Dealing with marketing and advertising fees
If you operate a marketing fund, the Code imposes certain restrictions on how you deal with the marketing and advertising fees contributed to that fund.
Firstly, you must maintain a separate bank account for marketing and advertising fees. You must also contribute to the fund on the same basis as other franchisees for each company-owned store that you operate.
Marketing and advertising fees may only be used to meet expenses that:
Freedom of association
You must not restrict or impair the freedom of existing or prospective franchisees to form an association or their ability to associate with one another for a lawful purpose.
General releases and waivers
You must not require a franchisee to sign a general release of the franchisor from liability towards the franchisee.
In addition, a franchise agreement must not contain, or require a franchisee to sign a waiver of any verbal or written representation that you have made.4
The Code requires you to notify a franchisee, in writing, as to whether you intend to either extend the franchise agreement or enter into a new agreement when the term of the agreement ends.
If you require a franchisee to contribute to a marketing or other cooperative fund, you must provide certain information to the franchisee about the fund.
Updating the disclosure document
Once you have entered into a franchise agreement, the Code requires you to update your disclosure document within four months after the end of each financial year.
However, you are not required to update your disclosure document if you did not enter into more than one franchise agreement during the last financial year (including transferring, renewing or extending a franchise agreement) and you do not intend to enter into another agreement in the following financial year (the disclosure exemption).
If a franchisee leases premises from you (or your associate) for their franchised business, you must give them a copy of the lease or agreement to lease within one month after the document is signed. You must, at the same time, provide the franchisee with the details of any incentive or financial benefit you or your associate will receive as a result of the agreement, including the name of the business providing the incentive or financial benefit.