You are required to read the media release about franchising below and determine what are the key points of this document. Using these key points, you are to write an essay that demonstrates your...

Running Head: FRANCHISING CODE OF CONDUCT 1
Franchising code of conduct
FRANCHISING CODE OF CONDUCT 2

What is Franchising code of conduct and competition act 2010 (cth)?
Objective: The code is introduced by the Australian Government in 1998 and it is
prescribed as a Mandatory code. And the main binders are Franchisees and Franchisors.
The purpose of the code is to provide proper regulations to all the activists involved in the
Franchising process, In other words franchisees should be aware of all the processes and
information about the franchise before taking the license. There is also a provision where both
the parties can solve their disputes using a cost-effective method.
The code is divided into four parts:
Preliminary: At this stage the discussion is mainly on the main applicants of the code
and key definitions.
Disclosure: It consists of the details which are essential for a franchisee to know before
entering into the agreement and also during the period, It also takes care of the suggestions
which are sought by a franchisee.
Conditions of the franchise agreement: In includes the terms of transfer, termination
and renewal.
Resolving disputes: Using a mediator, this step involves with the process of solving
disputes between both the parties.
Example includes Misleading, fixed pricing by the group (cartel pricing), Unconscionable
and other unfair activities are being taken care by code of conducts which helps to grow the
usiness fruitfully and not on the cost of some weaker section.
The purpose of Competition act is to improvise the welfare of Australians by promoting
Fair trades, competition and laws to protect consumers. (Frazer and McCosker ,1999).
FRANCHISING CODE OF CONDUCT 3
What is the importance of franchising code of conduct and competition act
2010(cth)?
In any economy franchised business contributes a chunk of business in the economic
activity; also to reduce the significant pressure of competition in the market you can ensure
success by using franchise.
Franchised business in any economy is responsible for many constructive activities such
as Job creation, contribution in the nation’s real Gross domestic production and building a
dynamics in the economy environment.
So considering all the above facts it is important for an economy to have franchising for
the improvement of the business environment and the Code of conduct helps you to understand
the power and authority you do have while applying for the same.
This Act helps in the regulation of mainly three behavior first is the protection from the
unfair practices where you are providing intentionally or unintentionally wrong information to
the recipient or a wrong idea about the situation, it would be considered as a misleading conduct
.Franchising code of conduct helps to promote fair practices
Second, It helps the weaker party to understand the documentation and the cost and the
circumstances where is it convenient for the weaker party to perform or not. It increases the
support to the weaker section and hence it encourages the larger group of small businesses. It
also supports at the time when stronger party has not fulfilled the desired conditions which are
for the benefit of the other. It helps to provide an industry code
Third, Anti-Competitive conduct restricts the misuse of market power if a company has a
substantial degree of power in a market must not take the advantage and spoil the competitors’
FRANCHISING CODE OF CONDUCT 4

usiness. There is also a prohibition of exclusive dealing, where It also maintains resale price
maintenance and acquisitions that are happening outside Australia which could ender loss to the
domestic nation. (Taylor.F,2010)
For you to become a Franchiser it is very important for you to assess all the obligations
under this act, eventually it will help you as they apply to you and to your business.
FRANCHISING CODE OF CONDUCT 5

The sorts of safeguard that franchising code of conduct and competition act 2010cth
provides
Australian franchising code of conduct was incorporated to regulate the conduct of
participants entering into a franchising agreement. It achieves this by requiring franchisors to
disclose specific facts to franchisees and to follow set procedures in their dealings with
franchisees. Following are the provisions of the same which act as safeguards to prevent disputes
etween the concerned parties:
Mandatory disclosure document should be prepared by franchisor which will help the
prospective franchisees in making an informed decision regarding entering into franchising
agreement and also aid them in running a smooth business afterwards. Details of documents to
e provided by franchisor to the franchisee before the agreement such as disclosure document,
copy of agreement and a copy of franchising code of...