(b) a copy of the independent audit shall be attached to the declaration set out in point 21.1. a) The statement in point 21.1 is supported by an independent audit which includes the following: The legislative history of Final Note 3 contains information on each law that has (or will amend) the compiled law. The information includes details about the start of the change in laws and details about applications, storage or transitional provisions that are not included in this compilation. The information statement must be made available to the potential franchisee as soon as possible after formally requesting the acquisition of a franchise or expressing interest. (d) any other information to assess historical or future information on the profits of the franchise. Fiscal year relating to a franchisor and a franchise a period of 12 months for which the conclusion of the franchise is prepared for the franchisor. “To the franchisor`s knowledge, the income information provided is accurate (with the exception of certain earnings information specified in the document such as earnings information that the franchisor knows to be inaccurate)” (b) does not prevent the franchisor from requesting all or part of the statements referred to in paragraph (2)(a). (c) have the accounts audited by an approved statutory auditor within 4 months of the end of the financial year to which they relate; and · Know your rights – do your own research to make sure it`s the right decision for you. The Franchise Code of Conduct sets out the rights and obligations of those involved in a franchise relationship. It can be found in www.comlaw.gov.au.
In addition to the information previously included in the Information Statement, the new Information Statement includes a number of questions that a potential franchisee should ask or consider, including: In light of these recent developments, the franchisee should review its existing franchise agreements to ensure current compliance and reflect on the “future security” of its franchise practices. In particular: 21.1 A statement on the franchisor`s creditworthiness that: The plethora of franchise changes introduced and proposed this year shows that the “new normal” of franchising (at least for the next 12 to 18 months) will likely require franchisee participants to adapt to increased protection for franchisees and additional compliance obligations for franchisors, all under the continued vigilance of the ACCC. If the compiled law is amended by another law, the compiled law will apply as amended, but the amendment does not change the text of the law. As a result, this compilation does not show the text of the compiled law as amended. More information on any changes can be found on the Page of the Register of Laws series for the compiled law. Franchisors and franchisees must comply with the Franchise Code of Conduct, which exists under the Competition and Consumer Act, 2010, as well as consumer and corporate laws. The Franchise Code sets out the minimum requirements for a franchisor to provide you with specific information. Once concluded, a franchise agreement is a legally binding contract in which the terms of the franchise are set out. The information statement must be presented in font size 11 and must not be contained on more than two pages. A copy of the information statement is available on our website. (b) provide a franchisee with up-to-date information of the franchisor that is essential to the conduct of the franchise business.
While for many of us, 2021 has been a year of uncertainty and change as we get used to our “new normal,” participants in the franchising industry are experiencing a particularly high degree of movement. This year, there have been a number of legislative changes that have a significant impact on the rights and obligations of franchisors and franchisees under the Franchise Code of Conduct (Franchise Code), as well as several developments planned for next year that will have an additional impact on the franchising landscape. Given that many franchise agreements could fall into the category of “model contracts” with “small businesses”, these proposed changes could have far-reaching application in the franchising sector. For more information on franchising, visit www.accc.gov.au or call the ACCC Small Business Helpline at 1300-302-021. (ii) if the franchisor did not yet exist at the end of the last financial year, at the time of establishment; and in this article, we summarize these changes and suggest that, despite all the uncertainties, the “new normal” for franchising is relatively clear, at least from a regulatory perspective: increased protection for franchisees, additional compliance obligations for franchisors, and vigilant oversight by the ACCC. There is a constant obligation to provide an owner`s statement upon written request – as soon as possible and within 7 days. This includes information disclosed to the franchisor prior to the effective date of these changes, July 1, 2021, and penalties will apply in the event of a violation. (i) a declaration or declaration is made in accordance with point 21 of Annex 1; within 4 months of the end of the fiscal year to which the declaration relates; and · Get advice – get legal, accounting and/or business advice from professionals with franchise expertise. (a) makes a statement or claim in the franchisor`s information document; and as of July 1, 2021, a franchisor may not enter into a franchise agreement that allows it to cover its legal costs related to the preparation, negotiation or performance of the contract or the documents related to the contract. This appears to include not only the fee for initial franchise documentation, but also the collection of attorneys` fees for notices of violation, renewal notices, and termination notices.
The explanatory memorandum to the amendments to the Franchise Code suggests a very broad interpretation of this restriction on the recovery of legal costs. 1. The franchisor shall provide the potential franchisee with a copy of the information statement set out in Annex 2. 6.5 Subject to § 32 (1), the franchisor must provide the name, location and contact details of each franchisee for each event referred to in Article 6.4, provided that the information is available. (a) a statement of the period during which the undertaking was insolvent; Two important features of franchising are that the franchisor has established the business system you use and most franchise systems depend on each franchise to maintain consistency. For these reasons, franchisees are generally required to strictly adhere to the operating procedures established by the franchisor. Therefore, you may be limited in the changes you can make to the franchise system without the franchisor`s consent. unless the franchisor has received a written statement from the franchisee or prospective franchisee that the franchisee or prospective franchisee has received, read and reasonably understood the disclosure document and this Code. Appendix 2 – Information Statement for Potential Franchisees 52 The amendments to capex obligations essentially amend the Code to reflect the 2020 changes to the provisions of the Automobile Code. They limit the circumstances in which a franchisor may impose an obligation to make significant investments over time and set a higher threshold for the details necessary to rely on prior disclosure. There must now be a statement stating “as much information as possible”, including: justification; the amount, timing and nature of the expenditures; expected results and benefits; and the expected risks associated with it. We have worked with our franchisor clients to provide training to head office teams and have also updated the franchising module of our Online Compliance Manager training program.
Please contact a member of our team if you would like to discuss any of these training and compliance measures. b) ensure that the statement contains sufficient details on the Fund`s revenues and expenditures to provide useful information on: The report highlighted that so far this year, the ACCC has received two administrative decisions and five court decisions concerning small businesses and franchising issues, including the Federal Court: this document is not a complete guide to franchising, it is a starting point. .