The final version of the new Franchising Code of Conduct (new Code) effective from 1 April, 2025, has been released. It replaces the current Code.

Some Key Changes

1. General

This is a non-exhaustive summary of some key changes to the current Code.

2. Structural Reformatting

The new Code is reorganized into three chapters, requiring franchisors to reinterpret Code references in existing agreements. There is very little alignment between the old and new Codes.

3. Penalty Increases

Penalties are expanded to previously non-covered areas and increased up to 600 penalty units for a number of breaches like prohibiting liability releases and non-compliance with rules about breach notices.

4. Disclosure Updates

• Electronic issuing and signing of Disclosure Documents.
• Enhanced disclosure of judgments and proceedings, including ACCC investigations.
• A new “specific purpose fund” replacing marketing/advertising funds.
• Inclusion of material facts current at the time of disclosure.
• Greater disclosure about significant capital investment, including business risks and benefits.
• To reduce duplication, the Key Facts Sheet is merged into the Disclosure Document.

5. Franchise Agreements

• Terms must align with capital investment, ensuring franchisees have a reasonable return opportunity.
• Seven-day termination for wider set of serious breaches eg franchisee convicted of wage theft or breach of the Migration Act or Fair Work Act.
• Cooling-off period exemptions for existing franchisees acquiring additional franchises.
• “End of Term” arrangements, such as restraints of trade, have been altered/upgraded.

6. Dispute Resolution

More flexible options for alternative dispute resolution, with naming and shaming of uncooperative franchisors.

 

Transition & Future Reviews

• Transitioning will demand significant effort due to reformatting.
• Reviews of the new Code are mandated by 2030 and likely again in 2035.

 

For more details, our commercial team at Bell Legal Group are happy to assist. In the first instance, contact Karen Kerr on E: kkerr@belllegal.com.au  P: +61 7 5597 3366  F: +61 7 5597 3988

Book a Consultation

• Email: law@belllegal.com.au
• Phone: (07) 5597 3366