Underneath the Golden Boy - Robson Hall Faculty of Law

276 Underneath the Golden Boy
In 2006, a survey of franchising in Australia found that the most common
causes of franchisor-franchisee disputes were related to system compliance,
communication problems, and claims of misrepresentation. Mediation was used
as a means of resolving disputes more than twice as often as litigation. 183
The Franchising Code of Conduct was again reviewed in 2006 by the
Franchising Code Review Committee, established by the Australian Government
following concerns raised about whether the disclosure provisions of the Code
were working effectively and about the enforcement of the Code by the
ACCC. 184 The Committee made a number of recommendations, including the
following:
• the franchisor should be required to provide all agreements, in the form
in which they are intended to be executed, at the same time as the
disclosure documents. The Committee had found that franchisees were
in some cases given complete contracts only at the time of signing, and
that the contracts presented for signing sometimes differed from earlier
drafts;
• financial disclosure requirements should be extended to any
consolidated entity to which the franchisor belongs;
• the franchisor should be required to provide a risk statement identifying
known significant risks that could have a material impact on the
franchise;
• marketing fund annual financial statements should be required to be
audited;
• the requirement to disclose financial benefits from the supply of goods
or services to franchisees should include the amount or method of
calculation of the rebate or benefit;
• the ACCC should collect information respecting the auditing of
financial statements and determine whether the lack of audited
statements is causing unsatisfactory outcomes;
• where consent is obtained, the contact details of past franchisees should
be included in the disclosure documents (along with the number of past
franchisees who declined to give consent);
• the business experience of all who may have management
responsibilities with the franchisor should be disclosed;
• franchisor directors should be included among those required to provide
disclosure, and the scope of disclosure should be extended to criminal
convictions for non-serious offences;
183
Frazer, Weaven and Wright, supra note 27 at 11.
184
Franchising Code Review Committee, supra note 36 at 22.