Amendments to the code

As you would know from 1 March 2008 all Disclosure Documents and Franchise Agreements must comply with the new Franchising Code of Conduct ("Code"). A copy of the new Code must be provided with all Disclosure Documents.  The new Code can be found at www.comlaw.gov.au Simply type "franchising" in the Quick Search option. We have previously provided a detailed outline of the changes.  If you have not received a copy of our outline and would like to receive one please contact us.

One of the amendments to the Code has had an unintended retrospective effect. The Code now prohibits a Franchise Agreement from containing a waiver of any verbal or written representations made by the Franchisor.  This prohibition is currently effective from 1 October 1998.  On contacting the Federal Government's Office of Small Business we were informed that it was not intended for this clause to be retrospective. We are told the matter is being investigated. We will keep you updated with any developments.  In the meantime, potentially all representations made by franchisor's can be relied upon by franchisees even if the franchisee has signed a waiver or no representations certificate.

Notwithstanding the recent enactment of the new Code changes, the new Federal Labour Government has indicated that it will be looking at the possible inclusion of a good faith obligation into the Code.  This is despite the fact that the Courts already have the ability to imply such a duty into franchise agreements when necessary.

This article appears courtesy of Macpherson & Kelley Lawyers