Franchisor Obligations in Franchise Agreements
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Questions and Answers

What is the civil penalty for non-compliance with the requirement to provide documents to a prospective franchisee?

  • 700 penalty units
  • 500 penalty units
  • 800 penalty units
  • 600 penalty units (correct)
  • What is the minimum number of days before the franchisor and prospective franchisee enter into a franchise agreement that the franchisor must provide the required documents?

  • 21 days
  • 14 days (correct)
  • 10 days
  • 7 days
  • What document must be provided to a prospective franchisee, along with the franchise agreement and disclosure document?

  • A copy of the leasing agreement
  • A copy of the key facts sheet (correct)
  • A copy of the company's financial statements
  • A copy of the Code of Conduct
  • Under what circumstances must the franchisor provide a copy of the lease to the prospective franchisee?

    <p>If the premises are leased to the franchisor or an associate and the franchisor proposes to sublease the premises to the prospective franchisee</p> Signup and view all the answers

    What must the franchisor ensure is updated under subclause 8(6)?

    <p>The disclosure document</p> Signup and view all the answers

    What is the primary purpose of a disclosure document in a franchise agreement?

    <p>To give the franchisee information to make an informed decision about the franchise</p> Signup and view all the answers

    What format must the information in a disclosure document follow?

    <p>The format and order outlined in Annexure 1</p> Signup and view all the answers

    Who must sign a disclosure document?

    <p>The franchisor, or a director, officer or authorised agent of the franchisor</p> Signup and view all the answers

    What must be included in the table of contents of a disclosure document?

    <p>The page numbers of each item in Annexure 1, and attached documents</p> Signup and view all the answers

    What is the purpose of the 'Updates' section in a disclosure document?

    <p>To provide additional information about the franchise</p> Signup and view all the answers

    What is the timeframe for the franchisor to update the disclosure document after the end of each financial year?

    <p>4 months</p> Signup and view all the answers

    What is the consequence for a franchisor who fails to update the disclosure document as required?

    <p>Civil penalty of 600 penalty units</p> Signup and view all the answers

    When is a franchisor exempt from updating the disclosure document after the end of a financial year?

    <p>If the franchisor did not enter into a franchise agreement, or only entered into 1 franchise agreement, during the year</p> Signup and view all the answers

    What triggers the requirement for a franchisor to update the disclosure document, despite the exemption in Clause 9?

    <p>A request from a prospective franchisee under subclause 16(1)</p> Signup and view all the answers

    What is the purpose of the disclosure document, as outlined in the Competition and Consumer (Industry Codes—Franchising) Regulation 2014?

    <p>To disclose certain information to prospective franchisees before entering into a franchise agreement</p> Signup and view all the answers

    What form must the franchisor provide the disclosure document and key facts sheet in?

    <p>In the form or forms requested by the prospective franchisee</p> Signup and view all the answers

    What is the consequence for a franchisor who fails to provide an updated disclosure document?

    <p>A civil penalty</p> Signup and view all the answers

    When must the franchisor provide a copy of the statement, declaration or document to the prospective franchisee?

    <p>As soon as reasonably practicable</p> Signup and view all the answers

    What is the maximum amount of the civil penalty for a body corporate that fails to comply with the disclosure requirements?

    <p>An amount under clause 5A</p> Signup and view all the answers

    What is the consequence for a person who is not a body corporate that fails to comply with the disclosure requirements?

    <p>A civil penalty of $500,000</p> Signup and view all the answers

    What is the consequence of a franchisor not providing a franchisee with necessary documents at least 14 days before the renewal or extension of a franchise agreement?

    <p>The franchisor is liable to a civil penalty of 600 penalty units.</p> Signup and view all the answers

    Under what circumstances can a franchisee terminate the franchise agreement within 14 days?

    <p>If the franchisor proposes to lease premises to the franchisee.</p> Signup and view all the answers

    What documents must a franchisor provide to a prospective transferee when requesting consent to transfer a franchise agreement?

    <p>A copy of the existing franchise agreement and each other document required to give effect to the transfer.</p> Signup and view all the answers

    What is the minimum period of time a franchisor must provide documents to a franchisee before renewing or extending a franchise agreement?

    <p>14 days</p> Signup and view all the answers

    What is the consequence if a franchisor fails to provide a prospective transferee with necessary documents at least 14 days before giving consent to transfer a franchise agreement?

    <p>The franchisor is liable to a civil penalty of 600 penalty units.</p> Signup and view all the answers

    Under what circumstances can the franchisor deduct reasonable expenses from the amount repaid?

    <p>If the expenses or their method of calculation have been set out in the agreement</p> Signup and view all the answers

    What can the new franchisee do by written notice to the old franchisee and the franchisor?

    <p>Cease to be the franchisee and terminate the transfer agreement</p> Signup and view all the answers

    What happens if the new franchisee terminates the transfer agreement?

    <p>The old franchisee becomes the franchisee again</p> Signup and view all the answers

    What is a condition for the new franchisee to terminate the transfer agreement?

    <p>There was an agreement between the new franchisee and the old franchisee for the transfer</p> Signup and view all the answers

    What is the purpose of clause 26A?

    <p>To provide for a cooling-off period after transferring the franchise agreement</p> Signup and view all the answers

    What is the role of the old franchisee in the transfer of the franchise agreement?

    <p>The old franchisee transfers the franchise agreement to the new franchisee</p> Signup and view all the answers

    What is the consequence of the new franchisee ceasing to be the franchisee?

    <p>The old franchisee becomes the franchisee again</p> Signup and view all the answers

    What is the purpose of the written notice given by the new franchisee?

    <p>To terminate the transfer agreement</p> Signup and view all the answers

    What is a condition for the new franchisee to cause the old franchisee to become the franchisee again?

    <p>The old franchisee can become the franchisee again</p> Signup and view all the answers

    What is the relationship between the new franchisee and the franchisor?

    <p>The new franchisee and the franchisor are parties to a new franchise agreement</p> Signup and view all the answers

    What is the minimum timeframe for the franchisor's notice before the end of the term of the franchise agreement if the term of the agreement is 6 months or longer?

    <p>At least 6 months</p> Signup and view all the answers

    What is the consequence of not including a statement in the franchisor's notice about the franchisee's right to request a disclosure document?

    <p>Civil penalty of 600 penalty units</p> Signup and view all the answers

    For how long must a franchisor keep a written document or a copy of it, as required by the code?

    <p>At least 6 years</p> Signup and view all the answers

    What is the purpose of a franchisor keeping a document that supports a statement or claim made in the disclosure document?

    <p>To provide evidence</p> Signup and view all the answers

    What is the consequence of a franchisor not giving the required notice to the franchisee?

    <p>Civil penalty of 600 penalty units</p> Signup and view all the answers

    The franchisor can terminate the franchise agreement for no reason, without the consent of the franchisee if the franchisee has breached the agreement.

    <p>False</p> Signup and view all the answers

    The franchisor must give reasonable written notice of the proposed termination, and reasons for it, to the franchisee before terminating the franchise agreement.

    <p>True</p> Signup and view all the answers

    Part 4 of the code, which deals with resolving disputes, does not apply to disputes arising from termination under clause 28.

    <p>False</p> Signup and view all the answers

    The franchisor can terminate the franchise agreement at any time without giving notice to the franchisee.

    <p>False</p> Signup and view all the answers

    The civil penalty for failing to comply with the disclosure requirements is $600.

    <p>False</p> Signup and view all the answers

    A franchisor must allow the franchisee more than 30 days to remedy the breach of the franchise agreement.

    <p>False</p> Signup and view all the answers

    The franchisor is not required to give written notice to the franchisee if the franchisee breaches the franchise agreement.

    <p>False</p> Signup and view all the answers

    If the franchisee remedies the breach within the allowed timeframe, the franchisor can still terminate the franchise agreement.

    <p>False</p> Signup and view all the answers

    A civil penalty of 600 penalty units applies to the franchisor if the franchisee breaches the franchise agreement.

    <p>False</p> Signup and view all the answers

    The franchisor can terminate the franchise agreement without giving written notice to the franchisee.

    <p>False</p> Signup and view all the answers

    The franchisor can terminate the agreement without giving the franchisee any written notice if the franchisee does not meet the requirements of subclause 27(2) or subclause 28(3).

    <p>False</p> Signup and view all the answers

    If the franchisee refers the matter to an ADR practitioner for an ADR process, the franchisor can terminate the agreement immediately.

    <p>False</p> Signup and view all the answers

    The Ombudsman must appoint an arbitrator for the dispute as soon as practicable after receiving a request from the parties to the franchise agreement to do so.

    <p>True</p> Signup and view all the answers

    The civil penalty for non-compliance with the requirement to provide documents to a prospective franchisee is 600 penalty units.

    <p>True</p> Signup and view all the answers

    The franchisor can terminate the agreement without giving the franchisee any written notice if the franchisee does not meet the requirements of subclause 27(2) or subclause 28(3), and the franchisor has not given the franchisee 7 days' written notice of the proposed termination.

    <p>False</p> Signup and view all the answers

    A franchisor must enter into a franchise agreement that includes a provision that requires the franchisee to pay to the franchisor costs incurred by the franchisor in relation to settling a dispute under the agreement.

    <p>False</p> Signup and view all the answers

    A restraint of trade clause in a franchise agreement remains effective after the agreement expires if the franchisee had given written notice to the franchisor seeking to extend the agreement on substantially the same terms as those contained in the franchisor's current franchise agreement.

    <p>False</p> Signup and view all the answers

    A civil penalty of 600 penalty units applies if a franchisor fails to comply with the requirement to provide documents to a franchisee in relation to settling a dispute.

    <p>True</p> Signup and view all the answers

    A franchisor is exempt from updating the disclosure document after the end of each financial year.

    <p>False</p> Signup and view all the answers

    The franchisor can terminate the franchise agreement if the franchisee is convicted of a minor offence.

    <p>False</p> Signup and view all the answers

    A franchisor must provide a key facts sheet to a prospective franchisee along with the franchise agreement and disclosure document.

    <p>True</p> Signup and view all the answers

    The franchisor must provide the disclosure document in a format that is easy to read and understand.

    <p>True</p> Signup and view all the answers

    The franchisor has 30 days to update the disclosure document after the end of each financial year.

    <p>False</p> Signup and view all the answers

    A body corporate that fails to comply with the disclosure requirements is liable for a civil penalty of up to $50,000.

    <p>False</p> Signup and view all the answers

    The franchisor must keep a written document or a copy of it for at least 3 years, as required by the code.

    <p>False</p> Signup and view all the answers

    A franchise agreement may contain a clause that requires a party to bring an action or proceedings in relation to a dispute under the agreement in a State or Territory outside that in which the franchised business is based.

    <p>False</p> Signup and view all the answers

    A franchisor can require a party to refer a dispute under the agreement to an ADR process conducted in a jurisdiction outside Australia.

    <p>False</p> Signup and view all the answers

    A franchise agreement must contain a clause that specifies the jurisdiction in which a dispute under the agreement will be resolved.

    <p>False</p> Signup and view all the answers

    A franchisor is exempt from updating the disclosure document after the end of each financial year if there are no changes to the information required to be disclosed.

    <p>False</p> Signup and view all the answers

    A civil penalty may be imposed on a franchisor who fails to comply with the disclosure requirements, but the penalty is capped at a maximum amount for a body corporate.

    <p>True</p> Signup and view all the answers

    Subclauses (1), (1B) and (1C) apply to the renewal of an existing franchise agreement

    <p>False</p> Signup and view all the answers

    The franchisor must repay all payments made by the franchisee to the franchisor within 30 days if the franchisee terminates the agreement under subclauses (1), (1B) or (1C)

    <p>False</p> Signup and view all the answers

    The civil penalty for failing to comply with the disclosure requirements is 500 penalty units

    <p>False</p> Signup and view all the answers

    The franchisor must update the disclosure document within 30 days after the end of each financial year

    <p>False</p> Signup and view all the answers

    The purpose of the disclosure document is to outline the terms of the franchise agreement

    <p>False</p> Signup and view all the answers

    The franchisor can terminate the franchise agreement at any time without giving notice to the franchisee

    <p>False</p> Signup and view all the answers

    The franchisor must provide a copy of the lease to the prospective franchisee at least 30 days before the franchise agreement is signed

    <p>False</p> Signup and view all the answers

    The franchisor can terminate the franchise agreement without the consent of the franchisee if the franchisee has breached the agreement

    <p>False</p> Signup and view all the answers

    The disclosure document must be provided to the prospective franchisee in an electronic format

    <p>False</p> Signup and view all the answers

    The franchisor must allow the franchisee at least 60 days to remedy the breach of the franchise agreement

    <p>False</p> Signup and view all the answers

    The franchisor must sign the disclosure document on behalf of the franchisee

    <p>False</p> Signup and view all the answers

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