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Business View Australia - June 2015 107
rules laid down in the agreement and
this may hamper his independence and
creativity. However, strict adherence to
the procedures laid down is the founda-
tion on which this arrangement is built.
Regulatory framework for
franchise arrangements
The Franchising Code of Conduct
was implemented in October, 1998
and makes Australia a country which
has one of the strongest regulatory
frameworks for the franchise indus-
try. It enables aspiring entrepreneurs
to establish a business with the con-
fidence that they are protected by a
number of regulations drafted spe-
cifically for the purpose. Some of the
relevant provisions of the code are:
The franchisee has a 7 day “cool-
ing-off” period within which window
of time he has the option of with-
drawing from the franchising agree-
ment 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 document and
a draft of the proposed agreement.
The disclosure document contains a
great deal of information which would
help the franchisee make an informed
decision. The details required to be fur-
nished in this document include franchi-
sor’s company director details, on-going
litigation, territory details, obligations of
franchisor 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. Franchi-
sees in a variety of fields have provided
a range of high quality goods and ser-
vice across the country. This has been
of immense 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
industry one of the largest sectors of
the economy. This sector also gen-
erates a substantial number of jobs
and in 2014 employees in the fran-
chising industry numbered 461,000.
An important reason for the suc-
cess of this sector is the framework
of rules and regulations imposed by
the government to ensure that the
bureaucracy makes the establish-
ment of a small or medium sized
business an easy process. The fact
that the government also actively pro-
tects the rights of the franchisees
has helped in no small measure.
In view of the number of advan-
tages enjoyed by the franchising
industry, its continued success
and growth seems assured.
FRANCHISING