BY ALEXANDRA ECONOMOU
THE new federal Franchising Code of Conduct has been welcomed by industry and is expected to provide a more level playing field.
Following a review of the code by Alan Wein, Small Business Minister Bruce Billson announced changes which would take effect from January 1.
Among the changes was a general duty on franchisors and franchisees to act in good faith when dealing with each other.
It also outlined the requirement for franchisees to be provided with “short-form, easy-to-understand information regarding the risks and rewards of franchising at an early stage before they become emotionally and financially committed”.
The Motor Trade Association of South Australia was among the groups which welcomed the changes.
MTA SA chief executive Paul Unerkov said the changes provided a more level playing field between franchisors and franchisees.
“Through our national body, Australian Motor Industry Federation (AMIF), we have actively participated in the concentrated period of review and consultation,” he said.
“We think the changes will make things a bit fairer. “From 1 January, 2015 . . . there is now a statutory obligation for franchisors and franchisees to act in good faith and, importantly, penalties can apply if this obligation is breached.”
DBH Lawyers senior associate Chris Bruce, who specialised in franchising, said the sector could only flourish in an environment of goodwill.
“The alterations make the industry more transparent and accountable,” he said.