The Government has released for public consultation an exposure draft of amendments to the Franchising Code of Conduct ('the Code') and relevant provisions in the Competition and Consumer Act 2010 ('the CCA').
The exposure draft legislation gives effect to the Government's 'Future of Franchising' statement on policy reforms announced on 2 April 2014, which includes:
- introducing a general duty on franchisors and franchisees to act in good faith during their dealings with each other;
- enhancing the enforcement tools available to the Australian Competition and Consumer Commission to deal with serious breaches of the Code by amending the CCA to allow the regulator to:
- seek civil pecuniary penalties of up to $51,000 from the court, and
- issue infringement notices of up to $8,500 without having to seek a court order.
- improving disclosure and transparency of marketing funds and online sales arrangements;
- providing prospective franchisees with short form, easy to understand, information regarding the risks and rewards of franchising at an early stage before they become emotionally and financially committed; and
- clarifying and streamlining the operation of the Code, including the removal of unnecessary provisions to reduce red tape and compliance burdens on business.
The changes are expected to take effect from 1 January 2015.
The amendments are underpinned by the recommendations of the independent review by Alan Wein last year and are designed to strengthen the Code's effectiveness and improve its responsiveness to the sector's unique commercial characteristics. Information regarding the Government statement on franchising policy reforms and the review can be accessed at the Treasury website.
Given the extensive consultation that has already occurred as part of the review, comments are sought only on the technical aspects of implementing the law. There is no intention for this process to reconsider the policy underpinning these reforms.
Stakeholders are invited to comment on the draft bill and regulations that implement the Government's franchising policy reforms. Submissions close on 30 April 2014.