Business View Australia

Business View Australia - April 2015 27

this may hamper his independence and cre-

ativity. However, strict adherence to the pro-

cedures laid down is the foundation on which

this arrangement is built.

Regulatory framework for

franchise arrangements

The Franchising Code of Conduct was implement-

ed in October, 1998 and makes Australia a country

which has one of the strongest regulatory frame-

works for the franchise industry. It enables aspir-

ing entrepreneurs to establish a business with the

confidence that they are protected by a number

of regulations drafted specifically for the purpose.

Some of the relevant provisions of the code are:

• The franchisee has a 7 day “cooling-off” period

within which window of time he has the option

of withdrawing from the franchising agreement

which he has entered into.

• At least 14 days before the franchise agreement

is executed, the franchisor is required to furnish

to the prospective franchisee a disclosure docu-

ment and a draft of the proposed agreement.

• The disclosure document contains a great deal

of information which would help the franchi-

see make an informed decision. The details re-

quired to be furnished in this document include

franchisor’s company director details, on-going

litigation, territory details, obligations of franchi-

sor and franchisee, and dispute resolution and

termination provisions.

Furthermore, in January 2015 an updated Code

of Conduct was put into effect which imposed

heavy fines on franchisors if they did not follow the

required stipulations.

Prospects of the fran-

chising industry

The performance of this sector over the years has

been exemplary. Franchisees in a variety of fields

have provided a range of high quality goods and

service across the country. This has been of im-

mense benefit to consumers. In addition to this,

the total sales made at $144 billion is close to 10%

of the nation’s GDP, making the franchise indus-

try one of the largest sectors of the economy. This

sector also generates a substantial number of jobs

and in 2014 employees in the franchising industry

numbered 461,000.

An important reason for the success of this sector

is the framework of rules and regulations imposed

by the government to ensure that the bureaucracy

makes the establishment of a small or medium

sized business an easy process. The fact that the

government also actively protects the rights of the

franchisees has helped in no small measure.

In view of the number of advantages enjoyed by

the franchising industry, its continued success and

growth seems assured.