Updated version of the Franchise Code
The updated version of the Code Compilation No.2 dated 1 June 2020 and registered 22 June 2020 has been released.
- This is a compilation of the Competition and Consumer (Industry Codes—Franchising) Regulation 2014 that shows the text of the law as amended and in force on 1 June 2020 (the compilation date).
- Any amendments that do not commence on the 1 June 2020 can be checked on the Legislation Register (www.legislation.gov.au).
Franchisors must give to a prospective franchisee 14 days before they sign the agreement or pay non-refundable money the following documents to comply with the Code:
- the new version of the Code.
- their then current disclosure document.
- an executable version of the franchise agreement.
New vehicle dealership changes
New vehicle dealership changes commenced on 1 June 2020 that only apply to franchise agreements for new vehicle dealer franchises in summary they are:
End of term obligations
Manufacturers and dealers must:
- provide at least 12 months’ notice when not renewing a dealership agreement when the agreement is 12 months or longer.
- discuss, plan and agree on end of term arrangements when not renewing an agreement.
- provide a statement to the other party outlining why a dealership agreement is not being renewed.
These new end of term obligations apply to dealership agreements entered into, on or after the 1 June 2020 and will not apply to agreements in force until they are renewed or extended.
Capital expenditure disclosure
Pre contractual disclosure of significant capital expenditure must have greater detail and apply if a disclosure document is created or updated after 1 July 2020 and the dealership agreement is entered into, renewed or extended after the disclosure document was created or updated.
Access to dispute resolution
This now allows multi-franchisee dispute resolution and apply to existing agreements.
Penalties have increased
From 1 July 2020 penalties under the Code and some penalties under the Australian Consumer Law (ACL) have increased.
The value of a penalty unit has increased from $210 to $222.
This means that some breaches of the Code can attract penalties of up to $66,600. and infringement notices of $11,100 for body corporates, $2,220 for individuals and other entities.
The ACL applies to all traders in Australia, including franchisors with penalties since August 2018 of $10 million or more.