The Federal Government has endorsed all 23 recommendations made by the Independent Review of the Franchising Code of Conduct released on 8 February 2024.  The recommendations were based on feedback from regulators and stakeholders. It remains to be seen how the recommendations will be implemented, noting some are for further analysis rather than amendments.

A draft of the new Franchising Code will be released later in 2024 and will come into operation from 1 April 2025.

Some of the key recommendations are:

• Clarifying the purpose of the Code: “to improve standards of conduct and ensure access to information and dispute resolution”
• Simplifying the disclosure information required to be provided to franchisees (while retaining the content)
• Requiring franchise agreements to provide franchisees with a reasonable opportunity to make a return on investment (by extending clause 46B to apply to all franchise agreements, not just new vehicle dealership agreements)
• Provision for compensation to franchisees if their reasonable opportunity to make a return on investment is cut short
• Clarifying the definition of ‘motor vehicle dealership’ in the Code includes service and repair work
• Greater promotion of dispute resolution.

Further reviews:

• to examine restraints of trade and uncompetitive terms, and
• a comprehensive analysis to consider the introduction of a franchisor licensing scheme

We are currently undertaking reviews of our franchise clients’ disclosure and franchise documentation in anticipation of the upcoming changes.  Please get in touch if you would like us to review and advise on your documentation.