TOP 5 CHANGES
We have summarised below the top 5 changes made by the new Code:
1. ONE COMPREHENSIVE DOCUMENT
The previous Codes have been combined into one comprehensive document including the standards of conduct and ethics required of all members.
2. CODE HAS BEEN MODERNISED AND UPDATED
The new Code has also been modernised and amended to reflect the way franchises do business in 2024. For example:
- FANZ members are encouraged to use technology to reduce their environmental impact – such as by providing copies of the Code and/or disclosure document to franchisees electronically rather than in hard copy (where agreed by the franchisee);
- franchisees are still expected to use reasonable endeavours to clearly identify that they are a franchise business (but the prescriptive requirements in the old code have been replaced by an expectation that the franchisor sets clear guidelines for what a franchisee should do. In addition, all franchisee written contracts with customers should make it clear that the customer is dealing with the franchisee not the franchisor (you should already be requiring this as it is important); and
- the standards of conduct and ethics expected of members have been modernised and written in plain English.
3. INDEPENDENT ACCOUNTANCY/FINANCIAL ADVICE CERTIFICATES
The new Code has changed the requirements around independent advice certificates, and adds provision for FANZ members to be able to require that new franchisees provide either:
- a certificate from their accountant certifying that they have provided accounting/financial advice to the franchisee in relation to the franchise business; or
- a signed statement from the franchisee that the franchisor has recommended that the franchisee obtain independent accounting and/or financial advice but the franchisee declined to do so,
in addition to complying with these obligations in relation to legal advice. This reflects current best practice.
4. COMPLAINTS PROCESS
The new Code establishes a new and improved process for reviewing any responding to complaints against FANZ members for breaches of the Code. The new process allows the FANZ to appoint a Complaints Panel to review and make recommendations to the FANZ Board in relation to complaints and provides more information on sanctions if a member breaches the Code.
5. UPDATES TO DISCLOSURE DOCUMENTS
The FANZ Disclosure Document requirements have also been modernised and the information required to be disclosed by FANZ members clarified. These changes should make it easier for franchisors to prepare and update their Disclosure Document.
TRANSITIONAL ARRANGEMENTS
Under the new Code’s transitional arrangements:
- FANZ member franchisors have until 1 April 2025 to update their new franchise or master franchise agreements, preliminary agreements, independent advice certificates and disclosure documents to reflect the provisions of the new Code; and
- Franchise and master franchise agreements entered into before 1 April 2025 are not required to be updated until they are either renewed or amended but references in those agreements to the Code of Practice and/or Code of Ethics are deemed to refer to the new Code.
