Franchising Update: Franchising reforms expand franchisor disclosure obligations – March 2010

Franchisors will face disclosure requirements under the comprehensive reforms to the Franchising Code of Conduct announced by Small Business Minister Dr Craig Emerson. The proposed amendments will result in expanded disclosure requirements for the franchisor and will address the following five areas of problematic franchising behaviour considered by an expert panel convened by the government: unilateral contract variation; unforeseen capital expenditure; franchisor-initiated changes when a franchisee is trying to sell their business; attribution of legal costs; and confidentiality agreements. The expansion of the disclosure requirements will increase franchisors disclosure obligations and compliance costs but will provide greater protection to franchisees from unscrupulous operators [read more].