THE NEW FRANCHISING CODE OF CONDUCT

On 1st July 1998 the franchising code of conduct came into effect. The Code is prescribed as mandatory code pursuant to the new amendments to the Trade Practices Act 1974. A motor vehicle dealership agreement is specifically included in the definition of a franchise agreement under the code. The code is designed to provide protection for persons entering into, renewing or extending franchise agreements. Non compliance with the code by a franchise may result in private action by a franchisee or action on behalf of a franchisee by the Australian Competition and Consumer Commission. All elements of the code will apply to all franchises on and from 1 October 1998. Certain obligations apply between July and October 1998. The code creates extensive obligations of disclosure, creates cooling off rights, creates obligations in relation to marketing and co operative funds and transfer and termination of franchise agreements. The code also provides mediation procedures where disputes cannot be resolved within the franchise system. The code document is extensive and contains far too many aspects to deal with in a short article. If your business is affected by the code or you are contemplating purchasing a franchise, contact Peter Gell of this office. Peter Gell peterg@gells.com.au

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