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ARTICLE · 09 FEBRUARY 2004

Franchise Follies: Lessons In Licensing From The ACCC

Freehills
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Two recent Australian Competition and Consumer Commission (ACCC) actions have highlighted the need to carefully consider whether the Franchising Code of Conduct (Code) governs commercial agreements such as intellectual property licences and distributorship agreements.

AustraliaAntitrust/Competition Law
David Sarkin
David Sarkin

Licence or franchise?

Two recent Australian Competition and Consumer Commission (ACCC) actions have highlighted the need to carefully consider whether the Franchising Code of Conduct (Code) governs commercial agreements such as intellectual property licences and distributorship agreements.

The directors of Synergy in Business Pty Ltd (Synergy) and Lawsons Trading Co Pty Ltd (Lawsons) found out the hard way that the requirements of the Code cannot be avoided simply by describing a franchise relationship as a licence.

Criticism has been levelled at the breadth of the definition of a franchise agreement in the Code and its capacity for catching arrangements (such as certain product distribution arrangements) that would not generally be understood to be a franchise. The two cases do not provide new guidance on this issue as they were not disputed. They do, however, serve as a reminder to licensors of intellectual property to consider whether they are genuinely licensing or are in fact

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