As of 1 March 2008, insured franchisors will need to satisfy significant disclosure obligations following amendments to the Franchising Code of Conduct and the introduction of the new Trade Practices (Industry Codes - Franchising) Amendment Regulations 2001 (No.1).

• Franchisors will be prohibited from waiving any verbal or written pre-contractual representations made by them. Waivers in franchise agreements made after 1 October 1998 will be rendered retrospectively ineffective.

• Foreign franchisors with only one franchisee in Australia will no longer be exempt from the Code and its disclosure obligations.

• Materially relevant facts (such as changes to majority ownership, certain proceedings and judgments against franchisors and changes in ownership of intellectual property) will need to be continuously disclosed within 14 days of such facts changing or becoming known.

• A new Disclosure Document and franchise agreement will need to be provided 14 days before any changes to the scope of the franchise agreement (such as expansion of the franchisee’s territory & site operations).

Following the NSW Court of Appeal case of Ketchell (2007), breaches of the Code may also now render franchise agreements unenforceable and illegal. In that case, the franchise agreement was declared void due to a failure to comply with clause 11(1) of the Code, which stipulates that prospective franchisees must be provided a reasonable opportunity to read and understand the disclosure document and the Code before an agreement can be made.