Franchising Updates
A New Franchising Code of Conduct
A new Franchising Code of Conduct comes into effect on 1 April 2025 (the Franchising Code of Conduct 2024).
Key Dates
The changes it introduces will largely not have any impact until 1 November 2025, however, and changes to the content of the franchise disclosure document will not take effect until after 1 July 2026 for most Australian franchisors.
Overall Comments
The new Code can be described as a redesign of the old (2014) Code, rather than an overhaul. The numbering and wording of many of the regulations has changed, but the substance has not. Some of the notable changes are summarised below. In general, the new Code is clearer and less ambiguous than its predecessor and in that sense, represents a step forward.
Key Changes
Here are some of the key changes under the new Code:
The key facts sheet has been abolished.
More of the regulations attract penalties for non-compliance. By default, the penalty amount is $198,000 but higher penalties can be imposed for some serious breaches.
Franchisees can no longer dispute termination of a franchise agreement where the franchisor terminates on certain grounds, including where the franchisee no longer holds a licence that is required to carry on the franchised business.
Franchisors will be obliged to compensate franchisees where they terminate a franchise agreement early in some circumstances, including where the franchisor withdraws from the market.
Franchisors will be prohibited from entering into a franchise agreement unless the agreement provides the franchisee a reasonable opportunity to make a return during the term of the agreement. This change does not apply until 1 November 2025. This is one of the most significant changes to the Code and its ramifications require careful consideration.
The Ombudsman, who is responsibe for administering alternative dispute resolution under the Code, can now publicise the names of franchisors who have refused to engage in an alternative dispute resolution process.