Prospective franchisee advice statement

Prospective franchisee advice statement

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This document contains statements of independent advice in relation to a franchise agreement. Statements of advice, such as the ones contained in this precedent, must be provided to a franchisor by a franchisee before the parties may enter into a franchise agreement.

The Franchising Code of Conduct is located in Schedule 1 of the Competition and Consumer (Industry Codes—Franchising) Regulation 2014 (Franchising Code of Conduct). Under the Franchising Code of Conduct, a franchisee must provide to a franchisor a statement that he or she has obtained independent advice, or acknowledging that the he or she has been told to obtain advice but has chosen to not seek it.

Legislative framework

Section 10 of the Franchising Code of Conduct requires that, before a franchise agreement is entered into, the franchisor must have received from the prospective franchisee:

  • signed statements, that the prospective franchisee has been given advice about the proposed franchise agreement or franchised business, by an:
  • independent legal adviser;
  • an independent business adviser; and
  • independent accountant; or
  • for any of the above not provided, a signed statement by the prospective franchisee that the prospective franchisee:
  • has been given that kind of advice about the proposed franchise agreement or franchised business; or
  • has been told that that kind of advice should be sought but has decided not to seek it.

This document has been authored for LexisNexis by Stephen Giles, Partner, Norton Rose Fulbright.

This document is prepared with the assistance of Specialist Editor Murray Landis, Partner, K&L Gates.