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About collective bargaining
Collective bargaining is when 2 or more franchisees come together to negotiate terms, conditions and prices with their franchisor.
Together, the franchisees are called a bargaining group.
A bargaining group can help franchisees save time and money by sharing negotiating costs and using collective power to ask for better terms. For example, franchisees can get together to bargain with the franchisor about:
- supply arrangements
- contract terms that they want to change.
Some real-life examples of franchisees using collective bargaining are:
It’s important to understand collective bargaining. If you don’t do it properly, you may be breaking the law.
How to bargain as a group
If a group wants to bargain as a collective, there are 3 options available to get legal protection from the ACCC to do so.
- Use the collective bargaining class exemption
- Lodge a notification with the ACCC
- Apply for authorisation from the ACCC.
Use the collective bargaining class exemption
The collective bargaining class exemption is a process that allows franchisees to obtain legal protection in an easier, quicker and more cost-effective way.
There is a set process for using the class exemption:
- the franchisees in the bargaining group must complete the one-page notice form
- the group must then submit the notice to both the ACCC and to the franchisor. Once this is done, they are legally protected when they collectively bargain with the franchisor. Otherwise, they might have breached competition rules in the Consumer and Competition Act 2010.
Before using the class exemption, franchisees should understand the limitations of the process.
- The franchisor doesn't have to agree to negotiate with the collective bargaining group. While franchisees are allowed to form a bargaining group, there is no requirement for the franchisor to deal with a bargaining group. The franchisor may still choose to negotiate individually.
- The members of the bargaining group can share information as part of the bargaining process. However, the class exemption doesn't allow members to share commercially sensitive information beyond what is necessary for the bargaining process. For example, if franchisees want to collectively bargain with the franchisor about franchise opening hours, sharing information about prices they intend to charge their customers is likely to be beyond what is reasonably necessary.
- The class exemption doesn’t protect franchisees if they decide to hold a collective boycott.
The collective bargaining class exemption is also available for small businesses to collectively bargain with a target business, such as a supplier.
See collective bargaining class exemption for more information.
Lodge a notification or apply for authorisation
In most circumstances, the class exemption will be the best option for franchisees who want to collectively bargain.
But, if franchisees want the option to consider a collective boycott of their franchisor, or want to negotiate with a third party other than their franchisor, they may need to use the notification or authorisation process to obtain legal protection from the ACCC.
The authorisation process involves lodging a formal application, paying a fee, consultation with stakeholders, and waiting for the ACCC to decide.
Notification is usually simpler and faster than authorisation, but it's only allowed for certain conduct.
Rules around franchisor interference with associations
The Franchising Code of Conduct prohibits franchisors from restricting or limiting the freedom of franchisees and prospective franchisees from:
- forming an association
- associating with each other if it's for a lawful reason.