The new Franchising Code changes appear to have hit a Constitutional bump in the road.  Those familiar with the movie ‘The Castle’ will recall that section 51(xxxi) says:

 "The Parliament shall … have power to make laws …with respect to… the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws"

It seems that there is a view that some provisions of the new Code may potentially remove rights under franchise agreements which can be considered “property.”  There are also a number of other issues with the drafting of the new Code which means that we are not likely to see a new version until near the end of the year. The link to an update by the Franchise Council of Australia which summarises the main issues is below:

http://dbm.thewebconsole.com/S3DB1206/images/Code-Review-consultation-update-May-14-for-web.pdf

It seems that rather than reduce red tape and compliance costs, the Federal Government has realised that the introduction of the new Code (which is not intended to be retrospective) may lead to an increased compliance burden.

Hopefully the technical legal issues can be overcome and the franchising industry can eventually have the improvements in regulation which have been discussed now for so long.

For those who would like to recall the performance of ‘Dennis Danuto’ in ‘The Castle’, see https://www.youtube.com/watch?v=Gp6f1EMn1lo

(for the High Court scene on section 51(xxxi) fast forward to 2.46).