On 28 January 2022, a slightly amended version of the Franchising Code of Conduct (Code) was registered. A copy of the current compilation can be accessed here.
This updated version of the Code now applies, so all franchisors must ensure that they use this version of the Code (including for disclosure purposes) moving forward.
What are the changes?
The changes are quite minimal. Specifically:
- the term “restructuring practitioner” has been defined by reference to the definition given to that term in the Corporations Act 2001 (Cth);
- clause 17 of the Code, which relates to the disclosure of materially relevant facts, has been slightly expanded. Specifically, if a franchisor is required, under clause 17(3)(g) of the Code, to notify its franchisees that it has become a Chapter 5 body corporate, it must now tell the franchisee the name and address of the administrator, controller, liquidator or restructuring practitioner.
- the first Division 2 of Part 5 (Terms of Agreement) has been renumbered Division 1A (so that there is now only one Division 2 of Part 5); and
- a new Division 3 of Part 6 has been included which confirms when the amendment to clause 17 comes into effect (which was on 21 December 2021).
What do I need to do now?
Practically, these changes are unlikely to have a big impact on most franchisors. However, should a franchisor become a Chapter 5 body corporate, the changes may be relevant (depending on the form of insolvency).
More generally though, and as noted above, this version of the Code now applies and franchisors must commence using this version. In particular, franchisors that issue their own franchise documents must ensure that this version of the Code is included in their franchise packs.
This article was written by Allison McLeod, Partner and Louise Wolf, Special Counsel.