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Review of The Franchising Code of Conduct |
In 1998 a mandatory Franchising Code of Conduct was introduced under s 51AD of the Trade Practices Act 1974. The purpose of the Code was to assist franchisors and franchisees to make informed decisions when entering franchise agreements. The Code was also intended to provide a framework for a mandatory low-cost procedure for remedying franchise disputes and to outline minimum business conduct standards. |
A review of the Franchising Code was scheduled for within three years of its commencement date. Accordingly, the Franchising Policy Council (FPC) began a review of the Code on 1 December 1999. The review is currently being carried out in consultation with all industry members. |
The Franchising Policy Council’s review of the Franchising Code of Conduct focuses on:
- Evaluating the appropriateness of the scope of the Code;
- Evaluating the effectiveness of existing disclosure requirements and dispute resolution mechanisms;
- Estimating the cost of compliance with the Code and identifying options for minimising the burden of complying with the Code.
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| To assist the review, an independent survey of a representative sample of franchisors and franchisees was conducted. The results of the survey were released by the FPC in an Information Paper on 30 January 2000. |
Among other findings, the Survey revealed that:
- 95% of franchisors and 75% of franchisees are aware of the existence of the Code.
- 31.2% of franchisors claimed compliance with the code had cost then in excess of one percent of their annual turnover, whilst another 32.2% claimed code compliance had not cost them at all.
- Over half of franchisors surveyed considered the Code useful. However, only 14.4% of franchisees consider it have any relevance.
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| The Franchising Policy Council will submit a final report outlining the findings of the review and make recommendations to the Government on 31 May 2000. |
