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Federal review to scrutinise franchising code

THE debate around implementing legislative safeguards for franchisees has re-emerged with the federal government committing to a review of the Franchising Code of Conduct.

The code has been a long-running source of disagreement between franchisees and franchisors - particularly regarding its provision for each party’s rights at the end of a contract and the notion of ‘good faith’ behaviour.

Franchisees have argued for the code to be amended to include a clause stipulating mandatory ‘good faith’ behaviour to ensure they’re not thrown out of their business at the end of contracts without valid reason.

An effort to implement a similar clause in Western Australian law failed in 2011 when Liberal backbencher Peter Abetz’s Franchise Agreements Bill fell short by just one vote.

Now, federal Small Business Minister Brendan O’Connor has announced a review of the code to explore whether such a clause is necessary, or whether the requirement for each party to act in good faith is implied through existing laws.

The review is to be carried out by Alan Wein, who was co-founder and 50 per cent owner of the House franchise until 2000, when he sold his stake.

Since then, Mr Wein has established a mediation practise specialising in franchising.

Any outcome from the review will be of relevance to the long-standing dispute between Hungry Jack’s franchisor Jack Cowin and the global owner of KFC Yum! brands.

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