• Home
• Regulation
• Competition Policy
• Review of Franchising Reg.
• Discussion Document
• Appendix 2

• Competition Policy

• Review of Franchising Reg.

• Discussion Document
• Submissions
• Cabinet Paper

Requirements of Franchise Agreements in the Australian Code

Association of franchisees

Franchisors are prohibited from inducing franchisees or prospective franchisees not to form an association or associate with other franchisees or prospective franchisees for a lawful purpose.

Waiver of liability

A franchise agreement must not contain, or require a franchisee to sign, a statement that releases a franchisor from general liability towards the franchisee. A franchise agreement must also not contain, or require a franchisee to sign, a waiver of any verbal or written representation that a franchisor has made.

Transferring an agreement

The code provides for the transfer of a franchise agreement to a third party and a franchisor must not unreasonably withhold consent to the transfer. However, in certain circumstances, a franchisor is entitled to withhold consent. These include when:

• the proposed transferee is unlikely to be able to meet the financial obligations under the franchise agreement;
• the proposed transferee does not meet a reasonable requirement in the franchise agreement for the transfer of a franchise;
• the proposed transferee does not meet the franchisor's selection criteria;
• agreement to the transfer will have a significantly adverse effect on the franchise system;
• the proposed transferee does not agree in writing to comply with the obligations of the franchisee under the agreement;
• the franchisee has not paid or made reasonable provision to pay an amount owing to the franchisor; and/or
• the franchisee has breached the franchise agreement and has not remedied the breach.

Termination

The code sets out the specific requirements where parties seek to terminate a franchise agreement, covering three circumstances. These are: where there has been a breach by the franchisee; where there are special circumstances; and where there is provision for the termination of a franchise agreement in the agreement and there has not been a breach of the agreement by the franchisee, and they have not consented to termination.