The Australian Competition and Consumer Commission is helping the franchising sector to understand the new Franchising Code of Conduct ahead of its 1 January 2015 start date.
From 1 January 2015, the current franchising code will be repealed and replaced with a new code which will apply to all franchise systems operating in Australia.
To help franchisors, current and prospective franchisees and their professional advisers to make sense of the new code, the ACCC will be hosting a free interactive live webinar on 9 December 2014 at 12 pm.
As well as providing a general overview of the new code, the webinar will cover the ACCC’s approach to enforcing the code. Participants will also be able to ask questions.
“With the new franchising code due to start in the new year, it is important that franchisors, franchisees and prospective franchisees understand their rights and responsibilities under the code,” ACCC Deputy Chair Dr Michael Schaper said.
Some of the key changes the new code will bring include:
- introducing an obligation for franchisors and franchisees (including prospective franchisees) to act in good faith towards one another,
- Infringement notices of
- $8,500 for a company, and
- $1,700 for individuals and other entities,
- court ordered pecuniary penalties of up to $51,000 for breaches of the penalty provisions of the code,
- requiring franchisors to provide prospective franchisees with a short information sheet which clearly outlines some of the risks and rewards of franchising,
- requiring greater transparency around the use of marketing funds, including requiring the franchisor to keep the marketing and advertising fees in a separate account, and to provide meaningful information to franchisees about the fund’s income and expenditure, and
- requiring additional disclosure regarding the ability of the franchisor and a franchisee to sell goods and services online.
The ACCC’s enforcement priorities under the new code will include failure to act in good faith, failure to provide a disclosure document, refusal to attend mediation, and the unlawful termination of a franchise agreement.
“There will not be a moratorium period on enforcement action; however, the ACCC will be focusing on particularly egregious conduct.”
“As always, the ACCC will take a common sense approach to enforcing the code.”
The ACCC has developed guidance on the new code, including an updated Franchisee Manual and Franchisor Compliance Manual, which will be launched on 9 December 2014.
The ACCC also provides a resource for prospective franchisees through Griffith University’s Asia-Pacific Centre for Franchising Excellence. The Pre-Entry Franchise Education Program is a free, online program consisting of five modules and is designed to give small business operators and prospective franchisees a realistic understanding of franchising.