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TRADE PRACTICES (INDUSTRY CODES—FRANCHISING) REGULATIONS 1998 1998 No. 162 - SCHEDULE

TRADE PRACTICES (INDUSTRY CODES—FRANCHISING) REGULATIONS 1998 1998 No. 162 - SCHEDULE

                           SCHEDULE              Regulation 3

FRANCHISING CODE OF CONDUCT
PART 1—PRELIMINARY 1. Name of code This code is the Franchising Code of
Conduct. 2. Purpose of code The purpose of this code is to regulate the
conduct of participants in franchising towards other participants in
franchising. 3. Definitions (1) In this code: associate, for a franchisor,
means a person:

   (a)  who:

        (i)    is a director or related body corporate, or a director of a
               related body corporate, of the franchisor; or

        (ii)   for a franchisor that is a proprietary company—directly or
               indirectly owns, controls, or holds with power to vote, at
               least 15 per cent of the issued voting shares in the
               franchisor; or

        (iii)  is a partner of the franchisor; and

   (b)  whose relationship to the franchisor is relevant to the franchise
        system, including supplying goods or services to a franchisee.
        disclosure document means:

   (a)  for the grant, renewal or extension of a franchise—a document that
        contains the information mentioned in Annexure 1; or

   (b)  for the transfer of a franchise or a franchised business—a document
        that contains the information mentioned in Annexure 2. franchise
        includes the following:

   (a)  the rights and obligations under a franchise agreement;

   (b)  a master franchise;

   (c)  a subfranchise;

   (d)  an interest in a franchise. franchisee includes the following:

   (a)  a person to whom a franchise is granted;

   (b)  a person who otherwise participates in a franchise as a franchisee;

   (c)  a subfranchisor in its relationship with a franchisor;

   (d)  a subfranchisee in its relationship with a subfranchisor. franchise
        system includes a business system in which a franchisor grants a
        franchise to a franchisee. franchisor includes the following:

   (a)  a person who grants a franchise;

   (b)  a person who otherwise participates in a franchise as a franchisor;

   (c)  a subfranchisor in its relationship with a subfranchisee. interest in
        a franchise includes a legal or beneficial interest in:

   (a)  a franchise agreement or a franchised business; or

   (b)  shares or voting rights in a corporation, not being a listed
        corporation that owns a franchised business; or

   (c)  units or voting rights in a unit or other trust, controlled by a
        trustee, that owns a franchised business; or

   (d)  the capital or income of a partnership that owns a franchised
        business. master franchise means a franchise in which the franchisor
        grants to a subfranchisor the right:

   (a)  to grant a subfranchise; or

   (b)  to participate in a subfranchise. prospective franchisee means a
        person who deals with a franchisor for the right to be granted a
        franchise. serious offence means an offence under any law of the
        Commonwealth or a State or a Territory for which, if the act or
        omission had taken place in the Jervis Bay Territory, a person would
        be liable, on first conviction, to imprisonment for a period of not
        less than 5 years. Note Jervis Bay Territory is mentioned because it
        is a jurisdiction in which the Commonwealth has control over the
        criminal law. supply see subsection 4 (1) of the Act. Note 1 Under
        subsection 4 (1) of the Act, supply, when used as a verb, includes:

   (a)  for goods—supply (including re-supply) by way of sale, exchange,
        lease, hire or hire-purchase; and

   (b)  for services—provide, grant or confer; and, when used as a noun, has a
        corresponding meaning. Note 2 the Act means the
        Trade Practices Act 1974 (see the Trade Practices Regulations, r 2
        (1)). trade mark has the meaning given by the Trade Marks Act 1995.
        Note A trade mark is a sign (including any letter, word, name,
        signature, numeral, device, brand, heading, label, ticket, aspect of
        packaging, shape, colour, sound or scent (or any combination of
        these)) used, or intended to be used, to distinguish goods or services
        dealt with or provided in the course of trade by a person from goods
        or services so dealt with or provided by any other person (see
        Trade Marks  Act 1995 , s 17). transfer, for a franchise, includes an
        arrangement in which the franchise is granted, transferred or sold.
        (2) In this code, the following terms have the meanings given by the
        Corporations Law: accounting standard ACN ARBN body corporate director
        executive officer externally-administered body corporate insolvent
        under administration listed corporation misconduct officer proprietary
        company registered company auditor registered office related body
        corporate secretary small proprietary company. 4. Franchise agreement
        (1) A franchise agreement is an agreement:

   (a)  that takes the form, in whole or part, of any of the following:

        (i)    a written agreement;

        (ii)   an oral agreement;

        (iii)  an implied agreement; and

   (b)  in which a person (the franchisor) grants to another person (the
        franchisee) the right to carry on the business of offering, supplying
        or distributing goods or services in Australia under a system or
        marketing plan substantially determined, controlled or suggested by
        the franchisor or an associate of the franchisor; and

   (c)  under which the operation of the business will be substantially or
        materially associated with a trade mark, advertising or a commercial
        symbol:

        (i)    owned, used or licensed by the franchisor or an associate of
               the franchisor; or

        (ii)   specified by the franchisor or an associate or the franchisor;
               and

   (d)  under which, before starting business or continuing the business, the
        franchisee must pay or agree to pay to the franchisor or an associate
        of the franchisor an amount including, for example:

        (i)    an initial capital investment fee; or

        (ii)   a payment for goods or services; or

        (iii)  a fee based on a percentage of gross or net income whether or
               not called a royalty or franchise service fee; or

        (iv)   a training fee or training school fee;
but excluding:

        (v)    payment for goods or services at or below their wholesale
               price; or

        (vi)   repayment by the franchisee of a loan from the franchisor; or

        (vii)  payment for the wholesale price of goods taken on consignment;
               or

        (viii) payment of market value for purchase or lease of real property,
               fixtures, equipment or supplies needed to start business or to
               continue business under the franchise agreement. (2) For
               subclause (1), each of the following is taken to be a franchise
               agreement:

   (a)  transfer, renewal or extension of a franchise agreement;

   (b)  a motor vehicle dealership agreement. (3) However, any of the
        following do not in themselves constitute a franchise agreement:

   (a)  an employer and employee relationship;

   (b)  a partnership relationship;

   (c)  a landlord and tenant relationship;

   (d)  a mortgagor and mortgagee relationship;

   (e)  a lender and borrower relationship;

   (f)  the relationship between the members of a cooperative that is
        registered, incorporated or formed under any of the following laws:

   (i)  Co-operatives Act 1992 of New South Wales;

        (ii)   Co-operatives Act 1996 of Victoria;

        (iii)  Cooperatives Act 1997 of Queensland;

        (iv)   Co-operative and Provident Societies Act 1903 of Western
               Australia;

        (v)    Co-operatives Act 1997 of South Australia;

        (vi)   Co-operative Industrial Societies Act 1928 of Tasmania;

        (vii)  Co-operative Societies Act 1939 of the Australian Capital
               Territory;

        (viii) Co-operatives Act 1997 of the Northern Territory. 5.
               Application (1) This code applies to a franchise agreement
               entered into on or after 1 October 1998. (2) For the parties to
               a franchise agreement entered into before 1 October 1998:

   (a)  clauses 14 (Copy of lease), 15 (Association of franchisees) and 17
        (Marketing and other cooperative funds) applies to the parties on and
        after 1 July 1998; and

   (b)  the rest of this code applies to the parties on and after 1 October
        1998. (3) However, this code does not apply to a franchise agreement:

   (a)  if the franchisor:

        (i)    is resident, domiciled or incorporated outside Australia; and

        (ii)   grants only 1 franchise or master franchise to be operated in
               Australia; or

   (b)  to which another mandatory industry code, prescribed under section
        51AE of the Act, applies; or

   (c)  if:

        (i)    the franchise agreement is for goods or services that are
               substantially the same as those supplied by the franchisee
               before entering into the franchise agreement; and

        (ii)   the franchisee has supplied those goods or services for at
               least 2 years immediately before entering into the franchise
               agreement; and

        (iii)  sales under the franchise are likely to provide no more than
               20% of the franchisee's gross turnover for goods or services of
               that kind for the first year of the franchise. (4) Paragraph
               (3) (c) ceases to apply to a franchise agreement if:

   (a)  sales under the franchise provide more than 20% of the franchisee's
        gross turnover for the goods or services for 3 consecutive years; and

   (b)  the franchisee tells the franchisor that paragraph (a) applies. PART
        2—DISCLOSURE Division 2.1—Disclosure document 6. Requirement to give
        disclosure document (1) A franchisor must give a disclosure document
        under Annexure 1 to:

   (a)  a prospective franchisee; or

   (b)  a franchisee proposing to renew or extend a franchise. (2) A person
        who proposes to transfer a franchise or a franchised business must
        give a disclosure document under Annexure 2 to the proposed
        transferee. (3) However, a proposed transferee who is the franchisor
        may waive this requirement. (4) If a subfranchisor proposes to grant a
        subfranchise:

   (a)  the franchisor and subfranchisor must either:

        (i)    individually give a disclosure document to the franchisee or
               prospective franchisee; or

        (ii)   give to the franchisee or prospective franchisee a joint
               disclosure document that addresses the respective obligations
               of the franchisor and the subfranchisor; and

   (b)  the subfranchisor must comply with the requirements imposed on a
        franchisor by this Part. (5) If a franchisor proposes to grant a
        master franchise, the franchisor must give a disclosure document under
        Annexure 1 to the prospective subfranchisor. Note This does not apply
        to a franchise agreement to which paragraph 5 (3) (a) applies. 7.
        Layout (1) Information in a disclosure document must be set out:

   (a)  in the form and the order, and under the numbering, set out in
        Annexure 1 or 2 as the case requires (the relevant Annexure); and

   (b)  under the titles used in the relevant Annexure. (2) A disclosure
        document must have a table of contents based on the items in the
        relevant Annexure, indicating the page number on which each item
        begins. Division 2.2—Before franchise agreement 8. Application This
        Division applies to a disclosure document under Annexure 1 for:

   (a)  a prospective franchisee; or

   (b)  a franchisee proposing to enter into, renew or extend a franchise
        agreement. 9. Purpose and content of disclosure document (1) The
        purpose of a disclosure document under Annexure 1 is to give to a
        prospective franchisee, or a franchisee proposing to enter into, renew
        or extend a franchise agreement, information from the franchisor to
        help the franchisee or prospective franchisee to make a reasonably
        informed decision about the franchise. (2) A disclosure document:

   (a)  must include the information mentioned in Annexure 1; and

   (b)  may include additional information under the heading "Other relevant
        disclosure information"; and

   (c)  must be signed by a director or an executive officer of the
        franchisor. (3) A franchisor must update its disclosure document
        annually within 3 months after the end of each financial year of the
        franchisor. 10. Franchisor obligations A franchisor must give a copy
        of this code and a disclosure document in the form set out in Annexure
        1:

   (a)  to a prospective franchisee at least 14 days before the prospective
        franchisee:

        (i)    enters into a franchise agreement or an agreement to enter into
               a franchise agreement; or

        (ii)   pays non-refundable money to the franchisor or an associate of
               the franchisor in connection with the proposed franchise
               agreement; or

   (b)  to a franchisee at least 14 days before renewal or extension of the
        franchise agreement. 11. Advice before entering into franchise
        agreement (1) The franchisor must not:

   (a)  enter into, renew or extend a franchise agreement; or

   (b)  enter into an agreement to enter into, renew or extend a franchise
        agreement; or

   (c)  receive non-refundable money under a franchise agreement or an
        agreement to enter into a franchise agreement; unless the franchisor
        has received from the franchisee or prospective franchisee a written
        statement that the franchisee or prospective franchisee has received,
        read and had a reasonable opportunity to understand the disclosure
        document and this code. (2) Before a franchise agreement is entered
        into, the franchisor must have received from the prospective
        franchisee:

   (a)  signed statements, that the prospective franchisee has been given
        advice about the proposed franchise agreement or franchised business,
        by any of:

        (i)    an independent legal adviser;

        (ii)   an independent business adviser:

        (iii)  an independent accountant; or

   (b)  for each kind of statement not received under paragraph (a), a signed
        statement by the prospective franchisee that the prospective
        franchisee:

        (i)    has been given that kind of advice about the proposed franchise
               agreement or franchised business; or

        (ii)   has been told that that kind of advice should be sought but has
               decided not to seek it. (3) Subclause (2):

   (a)  does not apply to the renewal or extension of a franchise agreement;
        and

   (b)  does not prevent a franchisor from requiring any or all of the
        statements mentioned in paragraph (2) (a). Division 2.3—Transfer of
        franchised business 12. Disclosure document for proposed transferee
        (1) A person who proposes to transfer a franchised business must give
        to the proposed transferee a disclosure document under Annexure 2. (2)
        However, a proposed transferee who is the franchisor may waive this
        requirement.
PART 3—CONDITIONS OF FRANCHISE AGREEMENT 13. Cooling off period (1) A
franchisee may terminate an agreement (being either a franchise agreement or
an agreement to enter into a franchise agreement) within 7 days after the
earlier of:

   (a)  entering into the agreement; or

   (b)  paying any money under the agreement. (2) Subclause (1) does not apply
        to the renewal, extension or transfer of an existing franchise
        agreement. (3) If the franchisee terminates an agreement under
        subclause (1), the franchisor must, within 14 days, repay all money
        paid by the franchisee to the franchisor under the agreement. (4)
        However, the franchisor may deduct from the amount paid under
        subclause (1) the franchisor's reasonable expenses if the expenses or
        their method of calculation have been set out in the agreement. 14.
        Copy of lease (1) If a franchisee leases premises from the franchisor
        or an associate of the franchisor for the purposes of a franchised
        business, the franchisor or the associate from which the premises are
        leased must give to the franchisee 1 of the documents mentioned in
        subclause (2) within 1 month after the lease or agreement to lease is
        signed by the parties. (2) For subclause (1), the documents are:

   (a)  a copy of the agreement to lease;

   (b)  a copy of the lease. (3) If the franchisee occupies, without a lease,
        premises leased by the franchisor or an associate of the franchisor,
        the franchisor or the associate who leases the premises must give to
        the franchisee 1 of the documents mentioned in subclause (4) within 1
        month after:

   (a)  the occupation commences; or

   (b)  for the documents mentioned in paragraph (4) (b)—the documents are
        signed by the parties. (4) For subclause (3), the documents are:

   (a)  a copy of the franchisor's or associate's lease or agreement to lease;

   (b)  a copy of the documents that give the franchisee rights to occupy the
        premises;

   (c)  written details of the conditions of occupation. 15. Association of
        franchisees A franchisor must not induce a franchisee not to form an
        association or not to associate with other franchisees for a lawful
        purpose. 16. Prohibition on general release from liability (1) A
        franchise agreement entered into on or after 1 October 1998 must not
        contain, or require a franchisee to sign, a general release of the
        franchisor from liability towards the franchisee. (2) However,
        subclause (1) does not prevent a franchisee from settling a claim
        against the franchisor after entering into a franchise agreement. 17.
        Marketing and other cooperative funds (1) If a franchise agreement
        provides that a franchisee must pay money to a marketing or other
        cooperative fund, the franchisor must:

   (a)  within 3 months after the end of the last financial year, prepare an
        annual financial statement of the fund's receipts and expenses for the
        last financial year, including the amount spent on production,
        advertising, administration, goods or services supplied by the
        franchisor or an associate of the franchisor and other stated
        expenses; and

   (b)  have the statement audited by a registered company auditor within 3
        months after the end of the financial year to which it relates; and

   (c)  if the franchisee asks for a copy of the statement—give a copy of the
        statement to the franchisee within 30 days after the request. (2)
        However, a franchisor does not have to comply with paragraph (1) (b)
        for the financial year if 75% of the franchisor's franchisees in
        Australia, who contribute to the fund, agree. 18. Disclosure of
        materially relevant facts (1) If a disclosure document does not
        mention a matter mentioned in subclause (2), the franchisor must tell
        a franchisee or prospective franchisee about it within a reasonable
        time (but not more than 60 days) after the franchisor becomes aware of
        it. (2) For subclause (1), the matters are:

   (a)  change in majority ownership or control of the franchisor;

   (b)  proceedings by a public agency, a judgment in criminal or civil
        proceedings or an award in an arbitration against the franchisor in
        Australia alleging:

        (i)    breach of a franchise agreement; or

        (ii)   contravention of trade practices law; or

        (iii)  contravention of the Corporations Law; or

        (iv)   unconscionable conduct; or

        (v)    misconduct; or

        (vi)   an offence of dishonesty;

   (c)  a judgment against the franchisor, other than for unfair dismissal of
        an employee, under:

        (i)    section 127A or 127B of the Workplace Relations Act 1996; or

        (ii)   section 106 of the Industrial Relations Act 1996 of New South
               Wales; or

        (iii)  section 290 of the Workplace Relations Act 1997 of Queensland;

   (d)  civil proceedings in Australia against the franchisor by 10% or 10 of
        the franchisees in Australia of the franchisor (whichever is the
        lower);

   (e)  any judgment that is entered against the franchisor, and is not
        discharged within 28 days, for at least:

        (i)    for a small proprietary company—$100,000; or

        (ii)   for any other company—$1,000,000;

   (f)  any judgment that is entered against the franchisor in a matter
        mentioned in paragraph 4.2 (a) of the disclosure document;

   (g)  the franchisor becoming an externally-administered body corporate. (3)
        For paragraphs (2) (b), (c), (d), (e) and (f), the franchisor must
        tell the franchisee:

   (a)  the names of the parties to the proceedings; and

   (b)  the name of the court or tribunal; and

   (c)  the case number; and

   (d)  the general nature of the proceedings. (4) For paragraph (2) (g), the
        franchisor must tell the franchisee the name and address of the
        administrator, controller or liquidator. 19. Current disclosure
        document (1) A franchisor must give to a franchisee a current
        disclosure document under Annexure 1 within 14 days after a written
        request by the franchisee. (2) However, a request under subclause (1)
        can be made only once in 12 months. 20. Transfer of the franchise (1)
        A request for a franchisor's consent to transfer of a franchise must
        be made in writing. (2) A franchisor must not unreasonably withhold
        consent to the transfer. (3) For subclause (2), circumstances in which
        it is reasonable for a franchisor to withhold consent include:

   (a)  the proposed transferee is unlikely to be able to meet the financial
        obligations that the proposed transferee would have under the
        franchise agreement; or

   (b)  the proposed transferee does not meet a reasonable requirement of the
        franchise agreement for the transfer of a franchise; or

   (c)  the proposed transferee has not met the selection criteria of the
        franchisor; or

   (d)  agreement to the transfer will have a significantly adverse effect on
        the franchise system; or

   (e)  the disclosure obligations under clause 12 have not been met; or

   (f)  the proposed transferee does not agree in writing to comply with the
        obligations of the franchisee under the franchise agreement; or

   (g)  the franchisee has not paid or made reasonable provision to pay an
        amount owing to the franchisor; or

   (h)  the franchisee has breached the franchise agreement and has not
        remedied the breach. (4) The franchisor is taken to have given consent
        to the transfer if the franchisor does not, within 42 days after the
        request was made, give to the franchisee written notice:

        (i)    that consent is withheld; and

        (ii)   setting out why consent is withheld. 21. Termination—breach by
               franchisee (1) This clause applies if:

   (a)  a franchisee breaches a franchise agreement; and

   (b)  the franchisor proposes to terminate the franchise agreement; and

   (c)  clause 23 does not apply. (2) The franchisor must:

   (a)  give to the franchisee reasonable notice that the franchisor proposes
        to terminate the franchise agreement because of the breach; and

   (b)  tell the franchisee what the franchisor requires to be done to remedy
        the breach; and

   (c)  allow the franchisee a reasonable time to remedy the breach. (3) For
        paragraph (2) (c), the franchisor does not have to allow more than 30
        days. (4) If the breach is remedied in accordance with paragraphs (2)
        (b) and (c), the franchisor cannot terminate the franchise agreement
        because of that breach. (5) Part 4 (resolving disputes) applies in
        relation to a dispute arising from termination under this clause. 22.
        Termination—no breach by franchisee (1) This clause applies if a
        franchisor terminates a franchise agreement:

   (a)  before it expires; and

   (b)  without the consent of the franchisee; and

   (c)  if the franchisee has not breached the franchise agreement; and

   (d)  clause 23 does not apply. (2) For paragraph (1) (b), a condition of a
        franchise agreement that a franchisor can terminate the franchise
        agreement without the consent of the franchisee is not taken to be
        consent. (3) Before terminating the franchise agreement, the
        franchisor must give reasonable written notice of the proposed
        termination, and reasons for it, to the franchisee. (4) Part 4
        (resolving disputes) applies in relation to a dispute arising from
        termination under this clause. 23. Termination—special circumstances A
        franchisor does not have to comply with clause 21 or 22 if the
        franchisee:

   (a)  no longer holds a licence that the franchisee must hold to carry on
        the franchised business; or

   (b)  becomes bankrupt, insolvent under administration or an
        externally-administered body corporate; or

   (c)  voluntarily abandons the franchised business or the franchise
        relationship; or

   (d)  is convicted of a serious offence; or

   (e)  operates the franchised business in a way that endangers public health
        or safety; or

   (f)  is fraudulent in connection with operation of the franchised business;
        or

   (g)  agrees to termination of the franchise agreement.
PART 4—RESOLVING DISPUTES 24. Definitions In this Part: complainant means the
person who starts the procedure under clause 29. parties means the complainant
and the respondent in a dispute arising under a franchise agreement or this
code. respondent means the person with whom the complainant has a dispute. 25.
Mediation adviser
A mediation adviser is to be appointed for this Part by the Minister. 26.
Internal complaint handling procedure A franchise agreement entered into on or
after 1 October 1998 must provide for a complaint handling procedure that
complies with clauses 29 and 30. 27. Code complaint handling procedure A party
to a franchise agreement who has a dispute with another party to the franchise
agreement may start the procedure under clause 29. 28. Choice of procedure A
party to a franchise agreement who has a dispute with another party to the
franchise agreement may, at any time, choose to use the procedure under clause
26 or 27. 29. Procedure (1) The complainant must tell the respondent in
writing:

   (a)  the nature of the dispute; and

   (b)  what outcome the complainant wants; and

   (c)  what action the complainant thinks will settle the dispute. (2) The
        parties should then try to agree about how to resolve the dispute. (3)
        For mediation under a franchise agreement:

   (a)  if the parties cannot agree under subclause (2) within 3 weeks, either
        party may refer the matter to a mediator; and

   (b)  if the parties cannot agree about who should be the mediator, either
        party may ask the mediation adviser to appoint a mediator. (4) For
        mediation under this code, either party may ask the mediation adviser
        to appoint a mediator. (5) The mediator may decide the time and place
        for mediation. (6) The parties must attend the mediation and try to
        resolve the dispute. 30. Mediation under the code (1) The mediation
        adviser must, within 14 days after referral under paragraph 29 (3) (b)
        or subclause 29 (4), appoint a mediator for the dispute. (2) After
        mediation under this code has started, the mediator must tell the
        mediation adviser, within 28 days, that mediation has started. 31.
        Conditions (1) This Part does not affect the right of a party to a
        franchise agreement to take legal proceedings under the franchise
        agreement. (2) The parties are equally liable for the costs of
        mediation under this Part unless they agree otherwise. (3) The parties
        must pay for their own costs of attending the mediation.
                        ANNEXURE 1        Subclause 6 (1)
Disclosure document for franchisee or prospective franchisee 1. First page 1.1
On the first page:

   (a)  in bold upper case:
DISCLOSURE DOCUMENT FOR FRANCHISEE OR PROSPECTIVE FRANCHISEE; and

   (b)  the franchisor's name, ACN or ARBN, business address and phone number;
        and

   (c)  the date of the disclosure document; and

   (d)  the following statement: and
This disclosure document contains some of the information you need in order to
make an informed decision about whether to enter into a franchise agreement.
Entering into a franchise agreement is a serious undertaking.
A franchise agreement is legally binding on you if you sign it.
Take your time, read all the documents carefully, talk to other franchisees
and assess your own financial resources and capabilities to deal with the
requirements of the franchised business.
You should make your own enquiries about the franchise and about the business
of the franchise.
You should get independent legal, accounting and business advice before
signing the franchise agreement.
It is often prudent to prepare a business plan and projections for profit and
cash flow.
You should also consider educational courses, particularly if you have not
operated a business before. 2. Franchisor details 2.1 The franchisor's name,
ACN or ARBN, address of registered office and principal place of business in
Australia. 2.2 The name under which the franchisor carries on business in
Australia relevant to the franchise. 2.3 A description of the kind of business
operated under the franchise. 2.4 The name, ACN or ARBN, address of registered
office and principal place of business of each associate of the franchisor
that is a body corporate (if any). 2.5 The name and address of each associate
of the franchisor that is not a body corporate (if any). 2.6 For each
director, secretary, executive officer, or partner of the franchisor who is
likely to have management responsibilities for the franchisor's business
operations in relation to the franchise—name, position held and qualifications
(if any). 3. Business experience 3.1 A summary of the business experience in
the last 10 years of each person, other than an executive officer, mentioned
in item 2.6. 3.2 A summary of relevant business experience of the franchisor
in the last 10 years, including:

   (a)  length of experience in:

   (i)  operating a business that is substantially the same as that of the
        franchise; and

        (ii)   offering other franchises that are substantially the same as
               the franchise; and

   (b)  whether the franchisor has offered franchises for other businesses
        and, if so:

        (i)    a description of each such business; and

        (ii)   for how long the franchisor offered franchises for each such
               business. 4. Litigation 4.1 Details of:

   (a)  current proceedings by a public agency, criminal or civil proceedings
        or arbitration, relevant to the franchise, against the franchisor in
        Australia alleging:

        (i)    breach of a franchise agreement; or

        (ii)   contravention of trade practices law; or

        (iii)  contravention of the Corporations Law; or

        (iv)   unconscionable conduct; or

        (v)    misconduct; or

        (vi)   an offence of dishonesty; and

   (b)  proceedings against the franchisor under:

        (i)    section 127A or 127B of the Workplace Relations Act 1996; or

        (ii)   section 106 of the Industrial Relations Act 1996 of New South
               Wales; or

        (iii)  section 290 of the Workplace Relations Act 1997 of Queensland.
               4.2 Whether the franchisor or a director of the franchisor has
               been:

   (a)  in the last 10 years—convicted of a serious offence, or an equivalent
        offence outside Australia; or

   (b)  in the last 5 years—subject to final judgment in civil proceedings for
        a matter mentioned in paragraph 4.1 (a); or

   (c)  in the last 10 years—bankrupt, insolvent under administration or an
        externally-administered body corporate in Australia or elsewhere. 4.3
        For items 4.1 and 4.2—the following details (where relevant):

   (a)  the names of the parties to the proceedings;

   (b)  the name of the court, tribunal or arbitrator;

   (c)  the case number;

   (d)  the general nature of the proceedings;

   (e)  the current status of the proceedings;

   (f)  the date of order or undertaking under section 87B of the Act;

   (g)  the penalty or damages assessed or imposed;

   (h)  the names of the persons who are bankrupt, insolvent under
        administration or externally administered;

        (i)    the period of the bankruptcy, insolvency under administration
               or external administration. 5. Payments to agents 5.1 For any
               agreement under which the franchisor must pay an amount to a
               person who is not an officer, director or employee of the
               franchisor in connection with the introduction or recruitment
               of a franchisee—the name of the person. 6. Existing franchises
               6.1 Number, sorted by State or Territory, of:

   (a)  existing franchised businesses; and

   (b)  existing franchisees; and

   (c)  businesses owned or operated by the franchisor in Australia that are
        substantially the same as the franchise. 6.2 For each existing
        franchisee:

   (a)  business address, if this is not the franchisee's residential address;
        and

   (b)  business phone number; and

   (c)  year when the franchisee started operating the franchised business.
        6.3 However, if there are more than 50 franchises, the franchisor may
        instead give details under item 6.2 for all franchisees in the State,
        region or metropolitan area in which the franchise is to be operated.
        6.4 For each of the last 3 years and for each of the following events—
        the number of franchised businesses for which the event happened:

   (a)  the franchise was transferred;

   (b)  the franchised business ceased to operate;

   (c)  the franchise agreement was terminated by the franchisor;

   (d)  the franchise agreement was terminated by the franchisee;

   (e)  the franchise agreement was not renewed when it expired;

   (f)  the franchised business was bought back by the franchisor;

   (g)  the franchise agreement was terminated and the franchised business was
        acquired by the franchisor. Note An event may be counted more than
        once if more than 1 paragraph applies to it. 6.5 The franchisor is
        taken to comply with item 6.4 if the franchisor supplies details as
        far as the franchisor is aware that relate to events that happened
        before 1 July 1998. 7. Intellectual property 7.1 For any trade mark
        used to identify, and for any patent, design or copyright that is
        significant and material to, the franchise system (intellectual
        property):

   (a)  description of the intellectual property; and

   (b)  details of the franchisee's rights and obligations in connection with
        the use of the intellectual property; and

   (c)  whether the intellectual property is registered in Australia, and if
        so, the registration date, registration number and place of
        registration; and

   (d)  any judgment or pending proceedings that could significantly affect
        ownership or use of the intellectual property, including:

        (i)    name of court or tribunal; and

        (ii)   matter number; and

        (iii)  summary of the claim or judgment; and

   (e)  if the intellectual property is not owned by the franchisor—who owns
        it; and

   (f)  details of any agreement that significantly affects the franchisor's
        rights to use, or to give others the right to use, the intellectual
        property, including:

        (i)    parties to the agreement; and

        (ii)   nature and extent of any limitation; and

        (iii)  duration of the agreement; and

        (iv)   conditions under which the agreement may be terminated. 7.2 The
               franchisor is taken to comply with item 7.1 for any information
               that is confidential if the franchisor gives:

   (a)  a general description of the subject matter; and

   (b)  a summary of conditions for use by the franchisee. 8. Franchise
        territory 8.1 Whether the franchise is:

   (a)  for an exclusive or non-exclusive territory; or

   (b)  limited to a particular site. 8.2 For the franchised territory:

   (a)  whether other franchisees may operate a business that is substantially
        the same as the franchise; and

   (b)  whether the franchisor or an associate of the franchisor may operate a
        business that is substantially the same as the franchise; and

   (c)  whether the franchisor or an associate of the franchisor may establish
        other franchises that are substantially the same as the franchise; and

   (d)  whether the franchisee may operate a business that is substantially
        the same as the franchise outside the territory; and

   (e)  whether the franchisor may change the territory. 9. Supply of goods or
        services to a franchisee 9.1 For the franchisor's requirements for
        supply of goods or services to a franchisee—details of:

   (a)  any requirement for the franchisee to maintain a level of inventory or
        acquire an amount of goods or services; and

   (b)  restrictions on acquisition of goods or services by the franchisee
        from other sources; and

   (c)  ownership by the franchisor or an associate of the franchisor of an
        interest in any supplier from which the franchisee may be required to
        acquire goods or services; and

   (d)  the obligation of the franchisee to accept goods or services from the
        franchisor; and

   (e)  the franchisor's obligation to supply goods or services to the
        franchisee; and

   (f)  whether the franchisee will be offered the right to be supplied with
        the whole range of the goods or services of the franchise; and

   (g)  conditions under which the franchisee can return goods, and to whom;
        and

   (h)  conditions under which the franchisee can obtain a refund for services
        provided by the franchisor, and from whom; and

        (i)    whether the franchisor may change the range of goods or
               services, and if so, to what extent. Note Before a requirement
               is made under paragraph (b) or (c), the franchisor may notify,
               or seek authorisation from, the Australian Competition and
               Consumer Commission (see Act, Part VII). 10. Supply of goods or
               services by a franchisee 10.1 For the franchisor's requirements
               for supply of goods or services by a franchisee—details of:

   (a)  restrictions on the goods or services that the franchisee may supply;
        and

   (b)  restrictions on the persons to whom the franchisee may supply goods or
        services; and

   (c)  whether the franchisee must supply the whole range of the goods or
        services of the franchise. Note Before a requirement is made under
        paragraph (a) or (b), the franchisor may notify, or seek authorisation
        from, the Australian Competition and Consumer Commission (see Act,
        Part VII). 10.2 Whether the franchisor or an associate of the
        franchisor will receive a rebate or other financial benefit from the
        supply of goods or services to the franchisees, and whether any
        rebates or financial benefits are shared with franchisees directly or
        indirectly. 11. Sites 11.1 The policy of the franchisor or an
        associate of the franchisor for selection of the site to be occupied
        by the franchised business. 11.2 Details of whether the territory or
        site to be franchised has been subject to a franchised business
        operated by a previous franchise granted by the franchisor and, if so,
        details of the franchised business, including the circumstances in
        which the previous franchisee ceased to operate. 11.3 The details
        mentioned in item 11.2 may be in a separate document and may be made
        available for inspection at a time and place mentioned in the
        disclosure document. 12. Marketing or other cooperative funds 12.1 For
        each marketing or other cooperative fund, controlled or administered
        by or for the franchisor, to which the franchisee may be required to
        contribute, the following details:

   (a)  the kinds of persons who contribute to the fund (for example,
        franchisee, franchisor, outside supplier);

   (b)  whether the franchisor must contribute to the fund in relation to
        businesses owned or operated by the franchisor that are substantially
        the same as the franchised business and, if so, whether the
        contribution is worked out in the same way as for a franchisee;

   (c)  how much the franchisee must contribute to the fund and whether other
        franchisees must contribute at a different rate;

   (d)  who controls or administers the fund;

   (e)  whether the fund is audited and, if so, by whom and when;

   (f)  whether the fund's financial statements can be inspected by, or will
        be given to, franchisees;

   (g)  the kinds of expense for which the fund may be used;

   (h)  the fund's expenses for the last financial year, including the
        percentage spent on production, advertising, administration and other
        stated expenses;

        (i)    whether the franchisor or its associates supply goods or
               services for which the fund pays and, if so, details of the
               goods or services;

   (j)  whether the franchisor must spend part of the fund on marketing,
        advertising or promoting the franchisee's business. 12.2 The
        franchisor is taken to comply with paragraph 12.1 (h) if the
        franchisor supplies details as far as the franchisor is aware that
        relate to expenses incurred before 1 July 1998. 13. Payments
        Prepayments 13.1 If the franchisor requires a payment before the
        franchise agreement is entered into—why the money is required, how the
        money is to be applied and who will hold the money. 13.2 The
        conditions under which a payment will be refunded. Establishment costs
        13.3 Details of the range of costs to start operating the franchised
        business, based on current practice, for the following matters:

   (a)  real property, including property type, location and building size;

   (b)  equipment, fixtures, other fixed assets, construction, remodelling,
        leasehold improvements and decorating costs;

   (c)  inventory required to begin operation;

   (d)  security deposits, utility deposits, business licences, insurance and
        other prepaid expenses;

   (e)  additional funds, including working capital, required by the
        franchisee before operations begin;

   (f)  other payments by a franchisee to begin operations. 13.4 For item
        13.3, the details for each payment must include:

   (a)  description of the payment; and

   (b)  amount of the payment or the formula used to work out the payment; and

   (c)  to whom the payment is made; and

   (d)  when the payment is due; and

   (e)  whether the payment is refundable and, if so, under what conditions.
        13.5 For item 13.4, if the amount of the payment cannot easily be
        worked out—the upper and lower limits of the amount. Other payments
        13.6 For each recurring or isolated payment payable by the franchisee
        to the franchisor or an associate of the franchisor or to be collected
        by the franchisor or an associate of the franchisor for another
        person:

   (a)  description of the payment; and

   (b)  amount of the payment or formula used to work out the payment; and

   (c)  to whom the payment is made; and

   (d)  when the payment is due; and

   (e)  whether the payment is refundable and, if so, under what conditions.
        13.7 For item 13.6, if the amount of the payment cannot easily be
        worked out—the upper and lower limits of the amount. 14. Financing
        14.1 The material conditions of each financing arrangement that the
        franchisor, its agent or an associate of the franchisor offers to the
        franchisee for establishment or operation of the franchised business.
        15. Franchisor's obligations 15.1 Summary of the conditions of the
        franchise agreement that deal with obligations for a franchisor (or
        references to the relevant conditions of the franchise agreement, if
        attached), including providing training:

   (a)  before the franchised business starts; and

   (b)  during operation of the franchised business. 16. Franchisee's
        obligations 16.1 Summary of the conditions of the franchise agreement
        that deal with obligations for a franchisee (or references to the
        relevant conditions of the franchise agreement, if attached) for the
        following matters:

   (a)  site selection and acquisition;

   (b)  requirements for starting the franchised business;

   (c)  site or unit development;

   (d)  training before and during operating franchised business;

   (e)  opening the franchised business;

   (f)  complying with standards or operating manuals;

   (g)  using intellectual property;

   (h)  warranties and customer service;

        (i)    territorial development and sales quotas;

   (j)  maintenance and appearance of premises;

   (k)  insurance;

   (l)  marketing;

   (m)  indemnities;

   (n)  participation requirements for franchisee, directors, management or
        employees;

   (o)  records and reports;

   (p)  inspections and audit. 17. Summary of other conditions of agreement
        17.1 Summary of the conditions of the franchise agreement (or
        references to the relevant conditions of the franchise agreement, if
        attached) that deal with the following matters:

   (a)  term of the franchise agreement;

   (b)  variation;

   (c)  renewal or extension;

   (d)  conditions the franchisee must meet to renew or extend the franchise
        agreement;

   (e)  termination by the franchisor;

   (f)  termination by the franchisee;

   (g)  the franchisee's goodwill, if any, on termination or expiry;

   (h)  the franchisee's obligations when a franchise agreement is terminated,
        expires or is not renewed;

        (i)    the franchisor's rights to sell its business;

   (j)  transfer of a franchise;

   (k)  mediation;

   (l)  option or right of first refusal, if any, for the franchisor to buy
        the franchised business;

   (m)  the franchisor's rights, if any, to inspect financial and other
        records of the franchised business;

   (n)  confidentiality of the franchisee's records;

   (o)  death or disability of the franchisee or a director or shareholder of
        the franchisee;

   (p)  details of the operation or establishment of any franchisee
        representative body, eg Franchise Advisory Council;

   (q)  restrictions on the franchisee's operation of other businesses during
        or after the term of the franchise agreement;

   (r)  operations manual;

   (s)  choice of governing law. 18. Obligation to sign related agreements
        18.1 Summarise any requirements under the franchise agreement for the
        franchisee or directors, shareholders, beneficiaries, owners or
        partners of the franchisee to enter into any of the following
        agreements:

   (a)  a lease or other agreement under which the franchisee can occupy the
        premises of the franchised business;

   (b)  a chattel lease or hire purchase agreement;

   (c)  a security agreement, including a guarantee, mortgage or security
        deposit;

   (d)  a confidentiality agreement;

   (e)  an agreement not to carry on business within an area or for a time
        after the franchise agreement is terminated. 19. Earnings information
        19.1 Earnings information for the franchise, if it is given, must be
        based on reasonable grounds. 19.2 Earnings information may be given in
        a separate document attached to the disclosure document. 19.3 Earnings
        information includes information from which historical or future
        financial details of a franchise can be assessed. 19.4 If earnings
        information is not given—the following statement:
The franchisor does not give earnings information about a (insert type of
franchise) franchise.
Earnings may vary between franchises.
The franchisor cannot estimate earnings for a particular franchise. 19.5
Earnings information that is a projection or forecast must include the
following details:

   (a)  the facts and assumptions on which the projection or forecast is
        based;

   (b)  the extent of enquiries and research undertaken by the franchisor and
        any other compiler of the projection or forecast;

   (c)  the period to which the projection or forecast relates;

   (d)  an explanation of the choice of the period covered by the projection
        or forecast;

   (e)  whether the projection or forecast includes depreciation, salary for
        the franchisee and the cost of servicing loans;

   (f)  assumptions about interest and tax. 20. Financial details 20.1 A
        statement as at the end of the last financial year, signed by at least
        1 director of the franchisor, whether in its directors' opinion there
        are reasonable grounds to believe that the franchisor will be able to
        pay its debts as and when they fall due. 20.2 Profit and loss
        statement and balance sheet of the franchisor, prepared in accordance
        with accounting standards, for the last 2 years. 20.3 Item 20.2 does
        not apply if the statement under item 20.1 is verified by a registered
        company auditor. 21. Updates 21.1 Any information given under clause
        18 of the code that has changed between the date of the disclosure
        document and the date the disclosure document is given under the code.
        22. Other relevant disclosure information 22.1 Copy of proposed
        franchise agreement may be attached. 22.2 Copy of the code may be
        attached. 22.3 Any other information that:

   (a)  the franchisor wants to give; and

   (b)  does not contradict information required to be given. 23. Receipt 23.1
        On the last page of the disclosure document—a form in which the
        prospective franchisee can acknowledge receipt of the disclosure
        document.
                      ANNEXURE 2        Subclause 6 (2)

DISCLOSURE DOCUMENT FOR PROPOSED TRANSFEREE 1. Details 1.1 The franchisor's
name, ACN or ARBN, business address and telephone number. 1.2 The franchisee's
name, ACN or ARBN and business address. 1.3 Name and business or residential
address of each director of the franchisee. 1.4 A summary of the business
experience in the last 10 years of the franchisee and each person mentioned in
item 1.3, including length of experience in operating the franchised business.
1.5 Description of the franchised business and its business address. 1.6 A
copy of:

   (a)  the existing franchise agreement of the franchisee; and

   (b)  if the franchisee leases property for the franchised business and
        proposes to transfer the lease to the proposed transferee—each lease
        or agreement to lease, or a summary of the conditions of each lease or
        agreement to lease. 1.7 Details of assets of the franchised business
        to be transferred to the proposed transferee. 1.8 Profit and loss
        statements and balance sheets of the franchisee or the franchised
        business for the last 2 years. 1.9 Summary (or references to the
        relevant conditions of the franchise agreement, if attached) of
        obligations, that the franchisee has in relation to the franchised
        business, that are to be assumed by the proposed transferee. 1.10
        Summary (or references to the relevant conditions of the franchise
        agreement, if attached) of any conditions under the existing franchise
        agreement for transfer of the franchise. 1.11 Details of each of the
        franchisee's employees in the franchised business, including:

   (a)  name; and

   (b)  position; and

   (c)  length of service; and

   (d)  rate of pay; and

   (e)  outstanding obligations of the franchisee. 2. Other relevant
        disclosure material 2.1 Any other information the franchisee wants to
        give. 3. Disclaimer 3.1 A statement that:

   (a)  the information is given by the franchisee; and

   (b)  the franchisor does not guarantee the accuracy of the information. 4.
        Receipt 4.1 On the last page of the disclosure document—a form in
        which the proposed transferee can acknowledge receipt of the
        disclosure document.