There are a number of important franchise law changes for franchisees and franchisors taking effect in 2016 so make sure you update your documents. Our franchise lawyers can assist you in reviewing or drafting your Franchise Agreement and Disclosure Document.

Unfair Contract Terms in Standard Form Contracts

If you’re a franchise owner or franchisor, then you should know that as of November this year, your franchise standard form contracts should not contain any unfair terms. Unfair terms include terms where only one party can terminate, or vary the terms of, the contract. This legislation only affects small businesses, or anyone dealing with small businesses.
What does this mean for you? Before November 2016, you should revisit and revise the terms of your standard form contracts (especially your franchise agreement!) to remove or amend any unfair terms. If any contract terms are found to be unfair by a Court or tribunal, your contract (or part of your contract) may be unenforceable.

Stamp Up!

From the 4 January 2016, the Basic Postage Rate in Australia will increase from 70 cents to $1. This price increase means that franchisors will need to update their disclosure documents to ensure that the increase in postage is reflected. Sadly, you will also need to set aside a few more cents each month for your beloved stamp collection.

Reforms in Underquoting for Real Estate Agents (NSW only)

For franchisors operating in the real estate sector in NSW, you should be up to speed and be familiar with the changes that have come into effect on the 1 January 2016. Some key things to note are:

  • When estimating the price of a property, agents cannot be vague or undervalue quotes, such as saying “offers above $250,000” or “$250,000+”.
  • Agents must record and keep any statements about prices quoted to consumers for up to three years.
  • You may face fines of up to $22,000 as well as losing your commission and any fees earnt from the sale of the property if you are found to underquote in a manner contrary to the new laws.

For more information about the reforms, visit the NSW Fair Trading website.

Superannuation Capped

The government has also decided to cap the gross amount payable to individuals defined benefit income stream to 10%. This change means that if you earn $50,000 per annum from the defined benefit income stream, and you have a tax-free component of $6,000, then your assessable income will be calculated as $45,000 since your tax-free component is now capped at 10% (or $5,000 for this example).

Tax Avoidance Laws

From 1 January 2016, significant global entities that earn over $1 billion in annual global income will be required to become more transparent with the Australian government by filing general purpose financial statements. This means that companies with established schemes that divert revenue offshore to obtain tax benefits in Australia can now be cancelled at the discretion of the ATO.

Emma Jervis

Next Steps

If you would like further information on any of the topics mentioned in this article, please get in touch using the form on this page.