Question: When Does the Cooling-Off Period Not Apply?Answer:
The Franchising Code of Conduct gives franchisees the right to terminate the franchise agreement during the cooling-off period. This lasts for seven days from the earlier of the date the franchisee:
- signed the agreement; or
- made the first payment.
However no cooling-off period applies in the following three circumstances.
1. Transfer of Franchise Agreement
This occurs when you are selling your franchise business. To complete the sale, your interests under the signed agreement will need to be transferred to the incoming purchaser so that they can carry on the business as the new franchisee.
There is no cooling-off period which applies after you have transferred your interest to a third party.
2. Renewal of Franchise Agreement
You may need to renew a franchise agreement when the agreed term is close to its expiration date. Once you renew your agreement, there is no cooling-off period if you change your mind afterwards.
3. Signing of a Renegotiated Agreement
You may need to sign an updated copy of the franchise agreement when you and the franchisor have agreed to vary or update certain terms, such as the length of the contractual term or its scope.
When you sign this new agreement for the same business, no cooling-off period applies.