The Franchising Code of Conduct, which came into effect in 2010, places an obligation upon franchisors to provide prospective franchisees with a short, simple and plain English document that sets out their rights and responsibilities, according to Small Business Minister Craig Emerson.
The details of the franchise have to be made clear by franchisors, including any unilateral contract variations, unforeseen capital expenditure, requirements to meet legal costs and confidentiality restrictions with the franchise business.
“The reforms will put franchisees in a better position to understand the risks of going into franchising by giving them clearer information up front about the terms and conditions on offer,” commented the minister.
The guide in plain English also includes the process for the sale of the business, laid out in a clear manner, in addition to the current requirements under the Franchising Code.
The Franchise Council of Australia comments: “The measures are about further enhancing franchisee confidence without the need for onerous compliance obligations or confusing rule changes, which would do nothing but undermine investment in the sector and, ultimately, hurt both franchisor and franchisee.”