Franchise Code of Conduct

Franchise Code of Practice
The franchising code of practise was introduced by the Franchise Association. This code only applies to member of the association. It requires franchisors to produce a detailed disclosure document covering many areas to do with the franchise. Another requirement is the provision of a seven day cooling off period should the franchisee decide to change his or her mind about continuing.

The purpose of the Code of Practice is to encourage best practice throughout franchising in this country and to provide comfort for those who are coming into the franchise business to ensure that a standard is maintained.

It also provides a basis for self regulation of the franchise industry and demonstrates to the public as well as to country leaders that franchising is able to regulate itself and ensure that people do not lose their investment easily. Every member of the association has to agree to be bound by this code before they can obtain membership.

Code of Ethics
Members of the Franchise Association are required to subscribe to a Code of Ethics. This sets out the spirit within which the Code of Practice would be interpreted. Some franchisors feel that the Code of Ethics weighs against them because they feel it is too tough and unfairly favours franchisees.

However this is good for franchisees as it enables them to receive the full picture of what they are entering into and enables them to compare what is being offered by other, similar businesses. It sets out to ensure that people buying a franchise receive the information that they need to make a sound decision.

If a franchisor does not meet the commitments that have been made in the disclosure documents then the buyer can call on the law to help them under Fair Trading laws. It gives franchisees the reassurance that when they are dealing with a member of the association they are dealing with someone who has agreed to abide by the Ethics of his/her association.