Owning A Franchise and The Franchising Code Of Conduct


I own a Franchise and have had little or no back-up from the owners. I am now working for little to no pay and I am sinking, is there any way around this and what type of Legal help am I able to obtain?


The decision to purchase a Franchise is one that will have a major impact on your life.


In light of the increase in Franchises being sold throughout Australia, a legally binding Franchising Code of Conduct was introduced, to ensure that people considering buying a franchise were provided with enough information to make an informed choice, as well as protecting people who buy a Franchise from misleading, or deceptive conduct by the owners of the Franchise.


The Franchising Code of Conduct and the Disclosure Document


The Franchising Code of Conduct, requires the Franchisor (i.e. the company that you are buying the Franchise from) to provide you with a Disclosure Document at least 14 days before you sign a Franchise Agreement.


The Disclosure Document is extremely important if you are considering purchasing a Franchise, as it is required to include specific information on the Franchise as well as the Franchisor. This includes the following information:

–  The business experience of the Franchisor;

– Existing Franchises including their location and when they started business information;

– The number of Franchises that were transferred, terminated or renewed in the last three years;

– The site or territory to be occupied by your Franchise;

– Earnings information about the Franchise which is based on reasonable grounds; and

– Financial information about the company from which you are purchasing the Franchise.


The Franchising Code of Conduct and Dispute Resolution


The Franchising Code of Conduct also requires that any Franchise Agreement, includes steps to resolve disputes outside the Court system. This is usually by way of mediation.


The aim of the Dispute Resolution process is to preserve the relationship between the parties, whilst resolving a dispute speedily and cost-efficiently. The first step in this process is to notify the Franchisor in writing of the exact nature of your dispute, or complaint and the outcome you desire to resolve the dispute. In your case, this could be that the owners provide additional training and support to you.


What happens if the Franchising Code of Conduct is not followed?


If you believe that the owners have not followed the Franchising Code of Conduct, you have a number of options available to you as the Code is legally binding on you and the owners.


The options available can include damages payable to you from the owners, on account of the breach of the Code, as well as action by the Australian Competition and Consumer Commission against the owners for breaching the Code.


What type of Legal Advice do you need?


You need legal advice from a lawyer who understands the obligations placed on the owners under the Franchise Code of Conduct and whether they have breached these obligations. In addition, you need legal advice on whether damages are payable, or whether there has been any misleading or deceptive conduct by the owners in enticing you to buy the Franchise.

If you are a Franchisor or a potential or actual Franchisee and need advice on your rights and responsibilities under the Franchise Code of Conduct, call Barwick Boitano today on (02) 9630 0444 or email onfjb@bblawyers.com for an appointment.

Easy parking directly opposite the practice and convenient to local transport!