New franchising laws to come into play

Real estate groups and principals could be fined up to $51,000 under new franchising rules that take effect tomorrow.

The old Franchising Code will be repealed and replaced with the new Franchising Code of Conduct at the start of the year, according to the ACCC, which will regulate the code.

Franchise groups and franchisees will risk infringement notices and financial penalties of up to $51,000 for “serious breaches” of the new code.

The new code will also introduce an obligation for parties to act in good faith in their dealings with one another.

Real estate franchises will now have to provide their franchisees with “greater transparency in the use of and accounting for money used for marketing and advertising”.

They will also have to create a separate fund for marketing and advertising fees.

The new code will also oblige real estate franchises to provide prospective new franchisees with a short information sheet outlining the risks and rewards of franchising.

Groups will also have to make additional disclosure about the ability of a real estate franchise and its franchisees to sell online.

Real estate franchises will now be banned from imposing “significant capital expenditure” except in limited circumstances.

The ACCC said these are significant changes and that it is important for all parties to understand their rights and responsibilities under the new code.

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