The Competition and Consumer (Industry Code – Franchising) Regulations 2024 (Cth) (the New Code Draft), which replaces the Competition and Consumer (Industry Codes—Franchising) Regulation 2014 (the Old Code), is now in force and will commence on 1 April 2025. While it appears that the Australian Government has proceeded with many of the proposed changes that were contemplated in the Exposure Draft (see our previous update here), it is also important for franchisors to be aware that the New Code contains a number of transitional provisions.

When Does the New Code Apply?

The New Code will apply to: 

The Old Code will continue to apply to:

However, there are some significant transitional provisions in relation to the application of aspects of the New Code which we have outlined below. 

What is the Position in Relation to Compensation for Early Termination and Reasonable Opportunity for Return on a Franchisee’s Investment?

Two of the more significant changes introduced by the New Code are the placing of the following new obligations on franchisors: 

However, these sections will not apply to a franchise agreement entered into, transferred, renewed or extended before 1 November 2025. The delayed application of sections 43 and 44 is said to be intended to allow time for franchisors proposing to enter franchise agreements that are not new vehicle dealership agreements to adjust to these new requirements. New vehicle dealership agreements will though be subject to similar obligations in sections 45 and 46 from the commencement of the New Code (which are based on clause 46A and 46B of the Old Code respectively).

What are the Implications for Disclosure?

The New Code provides that:

Accordingly:

What are the Implications for Specific Purpose Funds and Marketing Funds?

Requirements relating to specific purpose funds that are not marketing funds or other cooperative funds have also been delayed. In this regard:

Section 100 of the New Code also deems compliance with the Old Code from 1 April 2025 to 31 October 2025 to be compliance with the New Code in relation to a specific purpose fund that is a marketing fund or other cooperative fund controlled or administered by or for the franchisor or a master franchisor (whether the franchisee is a franchisee or subfranchisee of the franchisor or master franchisor), in certain circumstances.

What are Some of the Key Takeaways for Franchisors?

Some of the key takeaways for franchisors in relation to the New Code are:

Leave a Reply

Your email address will not be published. Required fields are marked *