The ACCC has reminded franchising systems that it is actively scrutinizing contract terms, after a review two years ago found every agreement assessed contained potentially unfair clauses. 

Prevalent issues included unilateral variation clauses, withholding and set-off payment clauses, audit power clauses, restraint of trade clauses, and termination clauses. 

New legal protections came into effect in November 2023, making it unlawful to propose, use, or rely on unfair contract terms in standard form contracts with small businesses, including franchisees. 

Courts can now impose substantial penalties for using unfair terms. For corporations, the maximum penalty is up to $50 million or 30% of adjusted turnover for the contravention period. For individuals, the maximum penalty is $2.5 million. 

With the ACCC again warning franchisors to urgently review and update agreements or face enforcement action, now is the time to talk to us if you need a proper review of your agreements.

Give Vince Caruso a call now, before the ACCC comes knocking.

To hear Vince and Flora discussing more on this topic, please click here.

With a background in advising government, industry and business through complex reforms and crises, Sean Dignum regularly writes on franchising to help prospective franchisees navigate risk, ask the right questions, and make informed investment decisions.