Code confusion causes compliance concerns.
The introduction of amended disclosure provisions to the Franchising Code of Conduct from 1 March will provide greater protection for franchise buyers, but it is causing confusion among franchisors.
And it’s possible that some amendments may be interpreted differently.
Further uncertainty for the industry comes from the Ketchell case, where the NSW Supreme Court found a franchise agreement to be unenforceable due to a ‘technical’ breach of the code.
The High Court has granted leave to appeal to the franchisor, and the franchise industry group is drumming up the funds to help it proceed.
Some clarity on the amendments to the code was provided recently when the small business policy division of the Federal Government revealed that the code’s prohibitions on release from liability will apply from 1 March 2008, not 1 October 1998, as previously thought.
This acknowledgement should give the franchise community hope that other confusing elements of the new code will be further clarified.
Regardless, key changes to the code, such as the requirement to include a list of former franchisees who have left, sold or been terminated in the last three financial years to prospective franchisees, remain. Read full article.
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