On June 3, 2010, the Australian federal government released new amendments to the Franchising Code of Conduct. The changes will take effect July 1, 2010. Some significant changes that franchisors need to be aware of include the requirement to: (1) inform franchisees, at least six months prior to the end of the franchise agreement, of the franchisor's decision regarding the renewal of the franchise agreement; (2) disclose all payments that a franchisee may be required to make to third parties, where the expenditure is within the knowledge or control of, or is reasonably foreseeable by, the franchisor; (3) disclose whether the franchisor will require the franchisee to undertake any unforeseen significant capital expenditure that was not previously disclosed by the franchisor; (4) disclose the circumstances in which the franchisor has unilaterally varied a franchise agreement in the last three financial years and the circumstances in which the franchise agreement may be unilaterally varied in the future (there is no requirement to disclose unilateral variations that occurred before July 1, 2010); (5) disclose the details of the franchisee’s rights at the end of the franchise agreement’s term, including disclosing the franchisor’s rights to acquire the franchisee’s business; and (6) disclose whether the franchisor will amend the franchise agreement on or before transfer or novation of the franchise.
The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.
About this Publication
The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP.
To subscribe to monthly emails for The Franchise Memorandum, please click here.