In addition to the Franchising Code of Conduct, there are several other laws and regulations that franchisors and franchisees need to comply with. These laws cover areas such as employment, intellectual property, business name registration, and consumer protection.
Employment Laws
Franchisees are responsible for complying with Australia’s employment laws, including the Fair Work Act 2009 (Cth). However, franchisors can also be held liable if they exert significant control over the franchisee’s operations. This is particularly relevant in cases where franchisees fail to comply with minimum wage requirements or workplace health and safety regulations.
To mitigate the risk of liability, franchisors should provide clear guidance to franchisees on their employment obligations and regularly audit franchisees’ compliance with these laws.
Fair Work Act Provisions Relevant to Franchising:
- Section 143A: Franchisees of the same franchisor are treated as a group of employers for the purpose of applying modern enterprise awards.
- Section 249: In certain cases, the Fair Work Commission may issue a single interest employer authorisation, requiring all franchisees to negotiate an enterprise agreement together.
Intellectual Property Laws
Protecting your brand is crucial in the franchising industry, and this includes securing trade marks and other intellectual property rights. The Trade Marks Act 1995 (Cth) allows franchisors to license their trade marks to franchisees, but it’s essential to ensure that these trade marks are used consistently and appropriately across all franchise locations.
Franchise agreements should include provisions that restrict how franchisees can use the franchisor’s intellectual property and specify the consequences of misusing trade marks or branding elements.
Business Name Registration
Under the Business Names Registration Act 2011 (Cth), businesses operating in Australia must register their business name with the Australian Securities and Investments Commission (ASIC). Franchisees may be required to register a specific variation of the franchisor’s business name, depending on the structure of the franchise system.
It’s important for franchisors to maintain control over the use of their business name and ensure that franchisees comply with any licensing agreements related to the name.
Australian Consumer Law
The Australian Consumer Law (ACL) applies to all businesses operating in Australia, including franchises. The ACL protects consumers from unfair contract terms, misleading or deceptive conduct, and false representations about goods or services. Franchisors must ensure that their franchise agreements comply with the ACL, particularly in relation to standard form contracts used with franchisees.
Unfair Contract Terms Provisions:
- Sections 23–27 of the ACL: These provisions protect franchisees from unfair terms in standard form contracts. If a court determines that a contract term is unfair, it can be voided, rendering the term unenforceable.
Additionally, franchisors and franchisees must be mindful of the ACL’s provisions relating to misleading or deceptive conduct. Any false or misleading representations about the franchise’s profitability, growth potential, or business operations can lead to significant penalties.
Competition and Consumer Act 2010 (Cth)
Part IV of the Competition and Consumer Act 2010 (Cth) prohibits certain restrictive trade practices, including exclusive dealing. This occurs when a franchisor restricts a franchisee’s ability to purchase goods or services from suppliers other than those specified by the franchisor. In some cases, exclusive dealing can substantially lessen competition, which is prohibited under the Act.
Franchisors can seek authorisation or notification from the Australian Competition and Consumer Commission (ACCC) to engage in exclusive dealing if it is deemed to benefit the public or enhance competition in some way.s and franchisees to resolve disputes through mediation. If a dispute arises, either party can initiate mediation, and both parties must participate in good faith. If mediation fails to resolve the issue, the parties may pursue legal action through the courts. who will contribute positively to your franchise network.
