On 2 April 2014, the Australian Government released its ‘Future of Franchising Statement’ outlining various policy reforms to franchising in Australia. The changes include amendments to the Competition and Consumer Act 2010 (Cth) and the Franchising Code of Conduct.
The exposure draft legislation outlines a number of key changes including:
- ensuring franchisees and franchisors act in good faith in their dealings with each other;
- introducing penalties of up to $51,000 for certain breaches of the Franchising Code of Conduct, as well as the ability to impose infringement notices of up to $8,500;
- introducing greater transparency for how marketing funds are used and accounted for;
- changes to disclosure requirements, including short form information statements to prospective franchisees and a simplified, standard form disclosure document;
- removing the ‘double disclosure’ requirements imposed on master and foreign franchisors in relation to subfranchisees; and
- greater auditing powers of the Australian Competition and Consumer Commission (ACCC).
The proposed changes follow a 2013 review of franchising in Australia, and are aimed at promoting growth in the sector, reducing red tape and ensuring that all participants follow best practice principles.