There are significant changes coming to the franchising industry. New regulations and a re-drafted Franchising Code of Conduct are set to begin from 1 April 2025.
The Franchising Code of Conduct (the Code) aims to ensure fairness in the franchising sector by addressing potential issues resulting from the power imbalance between franchisors and franchisees. Both franchisors and franchisees must follow the Code, and are required to act in good faith in their business dealings with each other. The Code also covers rules relating to:
- the information that franchisees must receive prior to entering an agreement
- cooling-off periods for and early termination of franchise agreements; and
- dispute resolution processes, including arbitration prior to court proceedings.
The old regulations under the Competition and Consumer (Industry Codes – Franchising) Regulations 2014 are due to sunset on 1 April 2025. Accordingly, and following the governmental response to the 2023 review of the Code, a new and reworked Code incorporating the 23 recommendations is intended to be developed, new regulations (Competition and Consumer (Industry Code – Franchising) Regulations 2024) to be introduced, and all commence from the sunset date, 1 April 2025.
While the existing Code was considered (under the government’s response) to be fit-for-purpose, it has been found that the industry would benefit from clearer statements, streamlining of pre-entry information, and consolidation of the Key Facts Sheet into the new version of the Code. The review also looked at more substantive legal and regulatory changes, as well as the feasibility of a licensing regime in the franchising industry.
If you are in or are impacted by the franchising industry, we strongly recommend keeping up to date on this space and the updated Code once it is introduced. Contact Rankin Business Lawyers for practical, on-point commercial legal guidance.
Stacey Brennan
Lawyer
