2023 Review of the Franchising Code - Key Findings and Recommendations
On 8 February 2024, the Minister for Small Business, the Hon Julie Collins MP, released the...
Frequently franchise disputes arise over the termination or purported termination of the franchise agreement by the franchisor.
The Franchising Code of Conduct (the Franchising Code) allows a franchisor to terminate a franchise agreement (provided that the franchisor follows the provisions set out in the Franchising Code):
If you have received a franchise termination notice you should seek advice from an experienced franchise lawyer as soon as possible.
A franchisor can terminate your franchise agreement if you have breached the franchise agreement and
The Franchising Code of Conduct (the Code) provides that a franchisor does not have to allow more than 30 days for a franchisee to remedy the breach.
If you have received a franchise breach notice which provides that you must remedy the breach in a period which is less than 30 days, you should first check the provisions of your franchise agreement to see what the specified period under the franchise agreement is.
If the specified period under the franchise agreement is less than 30 days, or the franchise agreement picks up the wording of the Code that the "franchisor does not have to allow more than 30 days" (and the Franchise Breach Notice complies with the franchise agreement), then a consideration will need to be undertaken of whether the relevant period is reasonable.
Factors to be taken into account in assessing whether any period is reasonable include:
A franchisor can terminate your franchise agreement if the franchise agreement allows the franchisor to terminate the franchise agreement in certain circumstances and one of those circumstances has occurred.
For example if the franchise agreement requires you to obtain a Visa and you have been unable to obtain the Visa, or if the franchise agreement requires you to complete training to the satisfaction of the franchisor and you have not done so.
A franchisor can terminate your franchise agreement in certain special circumstances set out in the Code and your franchise agreement, including if
If the franchisor proposes to terminate your franchise agreement on one of the grounds set out above:
If a franchise termination notice does not comply with the provisions of the Franchising Code of Conduct and/or your franchise agreement, the franchise termination notice may be invalid and you may have rights against the franchisor.
An experienced franchise lawyer can advise you about the options that are available to you.
Disclaimer
The information in this article is general in nature and is not intended to address the circumstances of any person or other entity. Although we do our best to provide timely and accurate information, we do not guarantee that the information in this article is accurate or that it will continue to be accurate in the future.
On 8 February 2024, the Minister for Small Business, the Hon Julie Collins MP, released the...
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