- Posted by camryn_admin
- On December 19, 2020
- 0 Comments
Most franchise agreements provide for a weekly or monthly payment or royalties as a percentage of revenue. Royalties on sales are not included in the pre-price, but if a minimum amount is not based on sales, this may be included in the calculation of the pre-contract price. The Australian Competition and Consumer Commission (ACCC) is the national competition and consumer regulator. A compliance and enforcement priority for the ACCC for 2018 is the protection of small businesses with respect to abusive clauses in enterprise contracts. Compliance with the code and ACL is at the top of the ACCC radar. The abusive contractual clause regime set out in Australian Consumer Law (ACL) has been in effect since July 1, 2010. An abusive contractual clause is a clause in a model contract that causes a significant power imbalance between the parties and is not deemed necessary to protect the interests of a party and interferes when invoked. Courts can overturn an abusive contractual clause, but there is currently no penalty for breaches of abusive contractual clauses. The ACCC had argued for the imposition of sanctions for non-compliance with the ACL`s abusive contractual clauses.
According to the ACL, an “unfair contract term” is a term that exists: some small contractors who enter into contracts have to sign a certain number of contracts. For example, documents that a franchisor may require a franchisee to sign if it becomes a franchisee. These documents may include, in addition to the franchise agreement, all or certain confidentiality agreements, guarantees, lease agreements, prior representation agreements. All of these documents should be considered as part of a legal risk assessment. Such a legal risk review should be as follows: just because a franchise agreement contains a term that may meet the criteria of an “unfair” clause does not mean that this clause is automatically unenforceable. It must be declared unenforceable by a court. Most franchisees and franchise agreements will meet the above criteria. The Committee received notices of deficiencies in the application and application of the abusive contractual clauses regime and concluded that the franchising industry had not been sufficiently deterred from not doing so. Here are some conditions of concern: franchisors and franchisees should conduct a thorough review of their franchise agreements to ensure compliance with the abusive duration regime of contracts. Contracts with potentially abusive clauses now carry an increased risk of regulatory action.
Franchisor companies should ensure that they are aware of the potential extension of the application of abusive contractual clauses. As part of the business, Back In Motion is also required to write in writing to any franchisee and former franchisee who has retired in the previous 12 months to inform them of the business. Franchisors should remember that the ACCC can require it to provide ACCC documents that the franchisor must produce or retain under the Code containing franchise agreements and disclosure documents.