Question three: Franchising code of conductFranchisors obligationsThe code conduct is set out in the trade practices regulations 1998. This code conduct generally applies to all franchise agreements entered into either renewed or an extension that occurs after 1st October 1998. The disclosure requirements are the main obligations of franchisors. Failure of a franchiser to comply with the code conduct has the following consequences: An action by the ACCC arising from a contravention of the trade practices Act is mandatory exposing the franchiser liable to pecuniary penalties. Claims for damages or in other cases declarations that provisions of the agreement are unenforceable. This agreement must comprise the following elements: There has to an agreement, whether written oral or implied.
It also comprises the grant of rights to the franchisee to supply goods and services within the country under the current implemented marketing plan. Finally, this document includes the right a trademark for a business transaction and payment of royalties relevant to rights granted (Corporations Act 2001 s 9). Disclosure obligationsEvery franchisor is obligated to maintain a disclosure document for the franchise. This document is created by the franchisor and provided to the franchisee before engaging in the franchise agreement.
This document could however also be presented in the process of renewing or extending the current franchise agreement. The content and form of this document generally depends on the annual turnover of the business to be franchised. In a case where the expected turnover is above $50,000 has to be in Annexure 1 of the Code Conduct format. Alternatively, if expected turnover is less than $50,000 it must be in the form of either Annexure 1 or 2.
The franchisor is obliged to give formally current information to be documented. To validate this document, the acting director or executive officer of the franchisor is required to sign it (William David D, 2005). Obligations before commence of the franchise agreement. Before entering this agreement, a franchisor has to agree to the terms and conditions. He should have read and understood the disclosure document as well as the written statement or prospectus presented. For new franchise agreements, the prospective franchisee ought to be given advice about the concerned agreement. It however optional whether or not the franchisee has decides to take the independent agreement. Below are some conditions that they should consider when masking the agreement. Cooling off period: This refers to a 7 day cooling period which allows the franchisee to terminate this agreement within seven days after making the payment.
If the agreement is terminated during this period, the franchisee has the right to claim refund of his funds to be paid within 14 days. Provision of copy of lease: In a case where premises are leased by a franchiser for purposes of business transaction, the franchisor has to give the franchisee within one month after occupation commences. Question TwoAnybody above the age of 18 and not an undischarged bankrupt automatically qualifies to be a settlor.
However anybody declared an undischarged bankrupt do not qualify to be a Settlor. It is possible and indeed very common for Settlors to also be Beneficiaries of the Trust. The Trustees on the other hand are a Corporation licensed to offer Trust and Fiduciary services.