23Entering into, renewing and extending franchise agreements

23 Entering into, renewing and extending franchise agreements

Application (1) This section applies to a franchisor if: (a) the franchisor proposes to enter into a franchise agreement with a prospective franchisee; or (b) the franchisor, or a franchisee (within the meaning of paragraph (a) of the definition of that expression), proposes to: (i) renew a franchise agreement; or (ii) extend the term or scope of a franchise agreement. Documents that franchisor must give prospective franchisee (2) The franchisor must give the prospective franchisee the following documents: (a) a copy of the franchise agreement, in the form in which it is to be executed; (b) if: (i) premises are leased to the franchisor or an associate of the franchisor; and (ii) the franchisor or associate proposes to sublease the premises to the prospective franchisee for the purposes of a franchised business, or to permit the prospective franchisee to occupy the premises for those purposes without a lease; a copy of: (iii) the lease of the premises to the franchisor or associate or, if the franchisor or associate is not in possession of the lease, a summary of the commercial terms negotiated by the franchisor or associate and the lessor of the premises (including any lease incentives); and (iv) if the lessor of the premises to the franchisor or associate complies with a requirement by or under a law of a State or Territory to disclose to the franchisor or associate (as lessee) written information relating to the lease—that information or, if the franchisor or associate is not in possession of that information, any information of that kind of which the franchisor is aware; (c) if the prospective franchisee has not given the franchisor a written notice under subsection (4)—the documents mentioned in subsection (5).

Note: If it is proposed that the prospective franchisee lease premises from, or occupy premises under another right granted by, the franchisor or an associate, section 50 lets the franchisee terminate the franchise agreement up to 14 days after being given a document setting out the terms of the lease or right to occupy the premises.

Changes to franchise agreement (3) If, after giving the prospective franchisee a copy of the franchise agreement, and before the agreement is executed, the franchisor makes a change to the agreement, the franchisor must give the prospective franchisee a copy of the changed agreement. Documents that prospective franchisee may opt out of receiving (4) The prospective franchisee may, by written notice given to the franchisor, opt out of being given the documents mentioned in subsection (5) if: (a) the prospective franchisee has, or has recently had, another franchise agreement with the franchisor that is the same or substantially the same as the franchise agreement; and (b) the business that is the subject of the franchise agreement is the same or substantially the same as the business that is or was the subject of the other franchise agreement. (5) For the purposes of paragraph (2)(c) and subsection (4), the documents are: (a) a copy of the disclosure document relating to the franchise: (i) if the disclosure document was created in the financial year in which the franchisor gives the prospective franchisee documents under subsection (2)—as created under subsection 20(1); or (ii) as most recently updated under section 21 or 33; or (iii) if neither subparagraph (i) or (ii) applies—updated to reflect the position of the franchise as at the end of the financial year before the financial year in which the franchisor gives the prospective franchisee documents under subsection (2); and (b) a copy of this Code. Franchise agreement not to be executed until after consideration period (6) The franchisor must not execute the franchise agreement with the prospective franchisee before the end of the period (the consideration period) of 14 days after the latest of the following: (a) the day the franchisor gives the prospective franchisee the documents required by subsection (2); (b) if, after the day mentioned in paragraph (a), the franchisor makes a change to the agreement other than a change mentioned in subsection (7)—the day the franchisor gives the prospective franchisee the changed agreement; (c) if, after the day mentioned in paragraph (a) and before the franchise agreement is executed, the franchisor gives the prospective franchisee earnings information in relation to the franchise—the day the franchisor gives the prospective franchisee that information.

Civil penalty: 600 penalty units.

(7) For the purposes of paragraph (6)(b), the changes are the following: (a) a change to give effect to a request by the prospective franchisee; (b) a change to fill in required particulars; (c) a change to reflect changes of address or other circumstances; (d) a change for a clarification of a minor nature; (e) a change to correct an error or reference. Repayment of payments made by prospective franchisee in consideration period (8) If, in the consideration period for a franchise agreement: (a) the prospective franchisee makes a payment (whether of money or of other valuable consideration) of an amount to the franchisor or an associate of the franchisor in connection with the agreement; and (b) the prospective franchisee subsequently gives the franchisor a written notice requesting the repayment of the amount; the franchisor must repay the amount to the prospective franchisee within 14 days after receiving the request.

Civil penalty: 600 penalty units.