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Practices

Franchising in Australia

Economy

Australia has the world's 13th largest economy, and has maintained continuous growth since 1992.

Legislation

Franchising is currently governed by the Trade Practices (Industry Codes - Franchising) Regulations 1998, named by the regulations as the Franchising Code of Conduct under the Trade Practices Act 1974 (TPA), this TPA is however to be renamed the Competition and Consumer Act. The Australian Competition and Consumer Commission administer and enforce the TPA.

Franchise Market

The franchise industry in Australia is a vast and contributes approximately fourteen (14) percent to the nation's GDP. Currently there are approximately 1,100 different business-format franchise companies in Australia. Of these systems, ninety one (91) percent are Australian-grown.

Franchise industry experts note that health and well being concepts are both popular franchise concepts and enjoy high consumer demand.

Franchise Legislation
  • There are no registration requirements for franchise agreements or the franchisor in Australia.
  • Disclosure documents must be produced prior to the franchisor receiving any non-refundable money from the franchisee or prior to the franchisee entering into the franchise agreement. Additionally the disclosure document must comply with the prescribed form, layout and content.
  • A franchise agreement can be in any form in Australia; written, oral or an implied agreement, as long as there is a 'right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan substantially determined, controlled or suggested by the franchisor or an associate of the franchisor'.
  • Other local laws for example the Corporations Act and those relating to tax, fair trade, and laws governing property may apply to the franchise relationship.
Conclusion

The mandatory disclosure obligations and requirements of the Competition and Consumer Act means that potential franchisors seeking to enter the Australian franchising market should consult specialist legal advice.