38Franchisor’s legal costs relating to franchise agreement

38 Franchisor’s legal costs relating to franchise agreement

(1) A franchisor must not enter into a franchise agreement that has the effect of: (a) requiring the franchisee to pay all or part of the franchisor’s costs of legal services relating to preparing, negotiating or executing the agreement or documents relating to the agreement; or (b) allowing the franchisor or an associate of the franchisor to require the franchisee to pay all or part of those costs; other than as permitted under subsection (2).

Civil penalty: 600 penalty units.

(2) The franchise agreement may require the franchisee to make a payment, before the franchisee starts the franchised business, of a fixed amount of dollars that: (a) is specified in the agreement; and (b) is stated in the agreement as being for the franchisor’s costs of legal services relating to preparing, negotiating or executing the agreement; and (c) does not exceed the reasonable and genuine costs of the services mentioned in paragraph (b); and (d) is stated in the agreement not to include any amount for the franchisor’s costs of legal services that will or may be provided, after the agreement is entered into, in relation to preparing, negotiating or executing other documents.