The power and information imbalance in franchising: The role of prior disclosure under the Franchising Code of Conduct

The recent report of the federal Parliamentary Joint Committee on Corporations and Financial Services, Opportunity not Opportunism : improving conduct in Australian franchising, concluded that while the prior disclosure obligations of the Franchising Code of Conduct were for the most part adequately addressed, there remained concerns because of the "continuing absence of an explicit over arching standard of con duct for parties entering a franchise agreement". With the government's rejection of the Committee's recommendation to explicitly incorporate a good faith obligationin the Code, enhanced prior disclosure has been relied on to address the Committee's concerns of opportunistic conduct. The recent reforms to the Franchising Code of Conduct were not to eradicate opportunistic conduct but to ensure that franchisees "go into businesses with eyes wide open". This article focuses on the role of priordis closure in addressing opportunistic conduct issues and proposes strategies to enhanceth eeffectiveness of prior disclosure.