In mid-June Alan Wein’s report of the latest Federal Government review of the Franchising Code of Conduct was published containing 18 recommendations for Government with respect to changes to regulation of the franchising industry.

Two major issues, which have been the subject of much debate in the sector, are the calls for a good faith obligation in franchising and the rights and obligations at the end of the franchise term.

The report’s recommendation is to incorporate the common law duty of good faith into the Code, rather than inserting a specific definition of good faith. This reflects the shift in attitude of the Franchise Council of Australia – a key stakeholder – to the concept of the duty of good faith being incorporated into the Code. Such a duty would apply to both parties, but would not prevent a party from acting in its legitimate commercial interests.In contrast, the demands by some that franchisees be compensated for their perceived loss of goodwill if a franchise is not renewed at the end of term or for the right of mandatory or automatic extension of franchise agreements have not been met. The report rejects these concepts as interference with the fundamental principles of contract and property law.