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ARTICLE · 12 SEPTEMBER 2007

Are Your Franchise Agreements Valid And Enforceable?

DLA Piper Australia
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It’s easy to get caught up in the excitement of recruiting new franchisees and expanding your franchise system with the belief that you, as franchisor, comply with the Franchising Code of Conduct (Code) and the signed franchise agreements are valid. The decision of the New South Wales Court of Appeal (NSWCA) calls into question the validity of all franchise agreements.

AustraliaCorporate/Commercial Law

It’s easy to get caught up in the excitement of recruiting new franchisees and expanding your franchise system with the belief that you, as franchisor, comply with the Franchising Code of Conduct (Code) and the signed franchise agreements are valid. The decision of the New South Wales Court of Appeal (NSWCA) in the case of Ketchell v Master of Education Services Pty Ltd [2007] NSWCA 161 calls into question the validity of all franchise agreements.

The Code

In line with section 51AE of the Trade Practices Act 1974 (Cth) (TPA) and clause 3 of the Trade Practices (Industry Codes - Franchising) Regulations 1998 (Cth), the Code is mandatory for all participants in the franchise industry. The Code applies to all franchise agreements entered into on or after 1 October 1998 and imposes duties and obligations on both franchisors and franchisees.

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