Joining us to discuss the changes to the Franchising Code is Andrew Wiseman who is a Partner in the Intellectual Property Group at Allens, Andrew thanks for joining us.

It's a pleasure.

Now Andrew the Franchising Code has been changed four times already since it was introduced in 1998, why more change?

Well there's been a bit of a preoccupation with this regulatory regime, I think in part the various governments since 98 have recognised the importance of protecting the mums and dads businesses, the small business community, and various electoral promises have been made including the most recent one, and with 73,000 franchisees, nearly 1200 franchisors and over 400,000 people employed within franchise systems, and I think there was a recent number of about $130 billion in revenue, you know the government regards it as an important part of the business community, and I think also there have been various states that have initiated plans for state legislation and there is a recognition at a national level that it would be much better for there to be a national harmonised system of regulation across the sector. So I think that's probably why it's had a bit more attention than some areas.

Well it makes sense. So Andrew what are the main changes being proposed?

Well probably the most important change and we saw it recently in connection with privacy, is a stronger enforcement regime. So for the first time there will now be penalties for breaches of the Franchising Code of Conduct, these range up to 50 odd – 51,000 in fact dollars in fines and the ACCC will be able to issue infringement notices at the lower end up to $8,500 with no prior recourse to court order. So for the first time we are seeing civil penalties being imposed across a whole range of obligations and breaches of them under the Code as opposed to civil actions where people can sue for damages. There's also some corresponding audit powers at the instance of the ACCC where they can require documentation supporting some of the claims made in disclosure documents and there's a mirror obligation in fact on franchisors to keep documents in the event that they're called upon to provide them to the ACCC. That's probably the main one.

And what about other changes, are there any other significant ones?

Contrary in fact to the recommendation of the Wein Report which led up to the exposure draft released by the Government this week, there is in fact being imposed or proposed to be imposed the new obligation of good faith, the thinking was that whatever it was at law would be brought expressly into the Code and that had been done but now we see a proposed elaboration of this, a duty to act honestly and not arbitrarily, a duty or an obligation to co-operate to achieve the purposes of a franchise agreement and this is an obligation of good faith that can't be excluded. It begs the question of course as to what honesty and arbitrariness will be, and there's been a lot of debate in terms the ability to make unilateral changes to agreements to impose certain things without necessarily providing reasons and so that sort of conduct will now be checked against this yard stick of an obligation of good faith which on its face seems to go further than the common law duty at this stage; so that's one of them. There's a new information statement that's required, this will not be a difficult thing to comply with but it is a required statement that deals with a number of risk areas for prospective franchisees, it covers a range of things like unexpected expenses, working capital requirements, online competing considerations, the question of there possibly being no automatic right of renewal and things like that, that might catch franchisees a little by surprise. And one other thing if I may, there's some changes to the disclosure document regime, there's some good news, there's less red tape, there's less disclosure of summaries of terms of the agreement, and I think particularly important for some of the multi-tier systems which often involves overseas head franchisors, there is now going to be no disclosure requirement as between a head franchisor and sub franchisees, so that's a very welcome change.

Well a number of changes that you've just mentioned, when can we expect the new laws to begin operation?

The exposure draft contemplates it all coming into force on 1 January 2015. So with just under nine months away so lots to do and lots of readiness for the many, many businesses in Australia and beyond that have business in Australia that will have to get an understanding of compliance with this new regime.

Yeah exactly. Well Andrew thanks for joining us and running us through some of the main changes.

Kate it's my pleasure.

That was Andrew Wiseman, who is a Partner in the Intellectual Property Group at Allens, and if you have any questions for Andrew you can send them through either using the panel on your screen or of course via email to law@brrmedia.com.

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