Franchisee Or Distributor - A Rose By Any Other Name?

The Franchise Code (the Code) is a mandatory code prescribed under the Trade Practices Act 1974 (Cth) (the Act). The purpose of the Code is to regulate the conduct of participants in franchising, which it does by primarily requiring franchisors to disclose specific facts to franchisees and to follow set procedures in their subsequent dealings with franchisees.

Recent case law serves as a timely reminder that describing a business arrangement as a 'distribution agreement' or similar will not prevent a Court from finding on the facts that the parties' relationship is actually caught by the statutory definition of a 'franchise agreement'.

Statutory regime

Part IVB of the Act provides for the establishment and enforcement of industry codes of practice. Section 51AE provides for industry codes to be prescribed by regulation. The Trade Practices (Industry Codes - Franchising) Regulations 1998 (Cth) was made pursuant to this power. The Franchise Code is contained in