Franchise Act 1998 · Updated to 1 Nov 2023 · Part IV · Conduct of Parties and Termination of Franchise Agreement
29. Conduct of parties
Feedback & supportA franchisor and a franchisee shall act in an honest and lawful manner and shall endeavour to pursue the best franchise business practice of the time and place.
franchisor
“franchisor” means a person who grants a franchise to a franchisee and includes a master franchisee with regard to his relationship with a subfranchisee, unless stated otherwise in this Act;
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franchise
“franchise” means a contract or an agreement, either expressed or implied, whether oral or written, between two or more persons by which— Franchise 9 (a) the franchisor grants to the franchisee the right to operate a business according to the franchise system as determined by the franchisor during a term to be determined by the franchisor; (b) the franchisor grants to the franchisee the right to use a mark, or a trade secret, or any confidential information or intellectual property, owned by the franchisor or relating to the franchisor, and includes a situation where the franchisor, who is the registered user of, or is licensed by another person to use, any intellectual property, grants such right that he possesses to permit the franchisee to use the intellectual property; (c) the franchisor possesses the right to administer continuous control during the franchise term over the franchisee’s business operations in accordance with the franchise system; and (d). (e) in return for the grant of rights, the franchisee may be required to pay a fee or other form of consideration. (f).
A franchisor and a franchisee in their dealings with one another shall avoid the following conduct:
franchisee
“franchisee” means a person to whom a franchise is granted and includes, unless stated otherwise in this Act— (a) a master franchisee with regard to his relationship with a franchisor; and (b) a subfranchisee with regard to his relationship with a master franchisee;
substantial and unreasonable overvaluation of fees and prices;
conduct which is unnecessary and unreasonable in relation to the risks to be incurred by one party; and
conduct that is not reasonably necessary for the protection of the legitimate business interests of the franchisor, franchisee or franchise system.
The franchisee shall operate the business separately from the franchisor, and the relationship of the franchisee with the franchisor shall not at anytime be regarded as a partnership, service contract or agency.