Underneath the Golden Boy - Robson Hall Faculty of Law

274 Underneath the Golden Boy
standards of franchisor disclosure, implemented franchisee cooling-off periods
and provided access to dispute resolution mechanisms. However, a 1995 review
found that only about 50% to 60% of franchisors had chosen to register. 174 The
Code was widely viewed to be ineffective, and was allowed to lapse in 1996. 175
In 1998, regulations implementing a mandatory Franchising Code of
Conduct 176 were made under the Trade Practices Act 1974. 177 The key features of
the Code are the requirement that franchisors provide the appropriate disclosure
document and a copy of the Code at least 14 days before an agreement is signed
or a non-refundable payment is made, a cooling-off period (a franchisee may
terminate an agreement within seven days of signing it or of making a payment),
mandatory mediation for dispute resolution and mandatory disclosure of
information by a vendor franchisee to a prospective purchaser of the franchisee’s
business. 178 A franchisor must provide a new disclosure document to franchisees
every year upon request. As well, a franchisor must not enter into, renew or
extend a franchise agreement or receive a non-refundable payment unless the
franchisee has provided a written statement that the franchisee has received,
read and had a reasonable opportunity to understand the disclosure document.
In the case of a new franchise agreement, the franchisor must also receive
signed statements from the franchisee that the franchisee has been given advice
by an independent legal or business advisor or an accountant or has been told
that that kind of advice should be sought but has decided not to seek it. A
franchisor may not induce a franchisee not to associate with other franchisees,
(date
accessed: May 12, 2007).
174
Ibid. Key franchising sectors, including the motor vehicle and real estate franchise industries,
chose not to be covered by the Code, and non-compliance with the Code was an issue even
among those franchisors who had registered.
175
Ibid.
176
Trade Practices (Industry Codes – Franchising) Regulations 1998, SR 1998 No. 162
[Franchising Regulations] online:
(date accessed: May 12, 2007).
177
Trade Practices Act 1974 , No. 51, 1974, amended to No. 92, 2006, online:
(date accessed: May 12,
2007).
178
Franchising Policy Council, Review of the Franchising Code of Conduct: Report of the
Franchising Policy Council (Report to the Minister of Employment, Workplace Relations and
Small Business, Australia, May 2000) at 16, online:
(date
accessed: May 12, 2007); Trade Practices (Industry Codes – Franchising) Regulations 1998,
supra note 32, s. 10.