From January 1, 2011, Australia has a single national consumer law, the Australian Consumer Law (ACL), which will have an impact on how you do business as a franchisee if non-retail selling is part of the franchise operation. The law contains new rules for unsolicited consumer agreements and regulates door-to-door sales and other forms of direct selling that do not occur in a retail context.

What this means is that if a potential client provides contact details or invites a franchisee in to demonstrate a product or quote on a service the door is no longer wide open for a sale to be made or even negotiated. These common sales practices must be carefully reviewed to ensure that approaches to potential customers are not inadvertently caught by these new laws if businesses wish to avoid the new obligations imposed by the ACL.

The ACL is applicable to any business engaged in direct selling to consumers, where consumers are approached or contacted by the supplier or their agent, the approach or contact takes place without encouragement or request from the consumer; and where the transaction is entered into at premises other than those of the supplier.

An unsolicited consumer agreement is entered into when the consumer neither invited the dealer to meet them or made any telephone call to negotiate a supply of goods or services.

Although the new consumer protections afforded by the ACL are welcomed and long overdue, they could potentially create some significant issues for businesses that are not engaged in direct selling as such, but whose sales practices involve an initial approach to a consumer to provide quotes and product demonstrations.

The new laws expressly provide that an invitation to quote a price for a supply is not equivalent to an invitation to discuss supply. This means that if a franchisee is invited to quote for a cleaning job or to measure and quote for blinds, any order taken to supply the goods or services during the quotation visit will be an unsolicited sale. The ACL imposes the following obligations on those making unsolicited sales in relation to the way consumers are approached; the hours during which unsolicited calls or attendances can be made; disclosure obligations; obligations to cease negotiating or to leave consumer premises upon request; and documentation requirements.

If an agreement is deemed to be unsolicited, the ACL prescribes a mandatory cooling off period of 10 days to allow consumers to unilaterally terminate an unsolicited transaction. During this time the supplier is prohibited from delivering the goods or services and cannot accept any money from the consumer.

If a supplier fails to comply with any of its obligations regarding an unsolicited sale, the cooling off period can be extended for up to six months and could entitle the consumer to end the contract, reject goods and obtain a full refund.

Exemptions apply to large corporations, publishers and emergency repair service providers. The ACL also prescribes which agreements are not regarded to be unsolicited agreements, including business contracts, an agreement made in the course of a party plan event and a subsequent agreement of the same kind.

There are hefty fines for failure to comply with the new law, so before you buy a franchise consider whether the business is involved in direct selling and if so, whether the franchisor has addressed the administrative, training and procedural issues to ensure compliance with the ACL.