The Government has released for public consultation on technical issues only an exposure draft of an amended Franchising Code of Conduct (‘the Code’) and amendments to the Competition and Consumer Act 2010 (‘the CCA’).

The changes to the CCA allow the regulator to:

• seek civil pecuniary penalties of up to $51,000 from the courts, and
• issue infringement notices of up to $8,500 without having to seek a court order.

The exposure draft Code includes:

• introducing a general duty on franchisors and franchisees to act in good faith and honestly, cooperatively and not arbitrarily during their dealings with each other, including during negotiations;
• improving disclosure and transparency of marketing funds and online sales arrangements;
• providing prospective franchisees with an information sheet regarding the risks and rewards of franchising at an early stage;
• preventing franchisors from imposing significant capital expenditure unless the expenditure is disclosed in the franchise agreement, a majority of franchisees in a system agree to the expenditure or the expense is considered necessary by the franchisor and can be justified by a statement which provides the rationale, costs and anticipated benefits associated with making the investment;
• preventing franchisors from unreasonably imposing restraints of trade on former franchisees.

The changes are expected to apply to franchise agreements entered into or renewed on or after 1 January 2015.