Franchise agreements often contain restraints of trade. The restraints typically apply for a period of time after the franchise ends, and may restrict franchisees from competing with the network or conducting a similar business within a particular geographical area.
Whilst these restraints can be legitimate and important protections for the franchise network, they can also be a major hinderance for franchisees looking to move onto their next venture.
Clause 23 of the Franchising Code of Conduct can be a way for franchisees to avoid the operation of these restraint clauses. However, it has quite a narrow application - and there numerous proactive steps that franchisees must take to obtain the benefit of the exception.