(02) 9555 1350
The website of the treasury section of the Australian Government has published information on the franchising code of conduct. The “future of franchise statement” has been released by the Australian government. Apart from outlining the government’s policy on reforming the franchisor-franchisee relationship, it furthers what Alan Wein had started last year with his reforms.
Franchising code of conduct
It is only natural to assume that the reforms are meted out towards ensuring fair exchanges between the franchisors and franchisees. It also stipulates penalties in cases of agreement breaches and talks about more auditing powers for the Competition and Consumer Commission.
You can read the original article here.
Franchise operation cases pending with and cleared by the court of law distinctly suggests how immorally both the parties have traded on occasions. The reform, in my opinion, is more than welcome in the given context.
Unethical conduct of the franchisors
Franchisors have dealt out unfair contract terminations and tampered disclosure agreement as part of their day’s work. On top of this, they have refuted all the norms of income projections and lured franchisees with sky-high figures, which are baseless to say the least.
The franchise agreement, it needs being said, should be all-encompassing in nature. It should delineate the costs of attaching to a franchise and the expected set of payments to be made in the foreseeable future.
‘Exclusivity’ should be better defined
It should also clearly talk about the exclusivity of a franchised territory. After all, it is unethical on the part of the franchisors to quote a 10 mile exclusive radius to a franchisee and then set another franchise operation within the radius. It is expected that the malls and airports will have such franchises running but then the carve-out clause establishes this before hand and the franchisees do not complain either.
The problem brews when traditional franchise outlets sprout up within the exclusivity radius. It is here that the agreement is breached. Great then that the reforms talked about in the franchising code of conduct will cater to this aspect of the franchise agreement, too!
If your business has suffered due to your franchisor’s unethical conduct or even if it is the other way round, do not hesitate to contact us here.