The Australian Competition and Consumer Commission welcomes the amendments introduced into the mandatory Franchising Code of Conduct.
Those amendments are scheduled for commencement on 1 October 2001, ACCC Commissioner for Small Business and Regional Australia, Mr John Martin, said today.
"The amendments announced today are a culmination of a major review of the Franchising Code of Conduct and the fact that they are being made also reflects the strong support from most participants in the franchising industry for the continuation of the mandatory code in a more flexible form.
"One significant amendment is the option of Short Form Disclosure for franchises with an expected turnover of less than $50,000 per annum. This is a reduction in categories of information to be disclosed from 23 to 11. The ACCC will always encourage those seeking to invest in or renewing a franchise to obtain full level disclosure. If, however, investors are satisfied that they and their advisers can make an informed decision with Short Form Disclosure then that have that option available. Short Form Disclosure is seen as a flexibility aimed at reducing the cost of compliance with the code.
"The introduction of the option of electronic offering of documentation by franchisors as an alternative to hard copy material is a sensible flexibility.
"The removal of the old Annexure 2 (disclosure by a franchisee selling to an in-coming franchisee) is noted. This repeal may even assist in emphasising the obligation that always exists on the franchisor to ensure that the incoming franchisee is recognised as a prospective franchisee and thus entitled to a copy of the franchisor's disclosure of information documentation prior to signing the separate and necessary franchise agreement. There have been cases under the previous provisions where the parties may have believed that compliance with Annexure 2 was all that was required. That was never the case and all those seeking to invest in a franchise are entitled to a disclosure document from the franchisor whether as a new entrant dealing directly with a franchisor or as a prospective transferee.
"The tightening of the mediation provisions of the code are timely and appropriate. Time is money to small business and the mediator should be able to terminate a mediation that is not making progress.
"The ACCC will continue to play its role in the administration and enforcement of the mandatory code. This Franchising Code of Conduct is still the only mandatory code prescribed under the Trade Practices Act 1974.
"Franchising is estimated to have an annual turnover of $81 billion in Australia. The industry is expanding both domestically and internationally. Australia is one of the few countries that have a mandatory code for franchising. It is encouraging to note that the code has the broad support of the franchising industry. It is regarded as a successful initiative introduce to assist the industry achieve best practice.
"Franchising covers a multitude of small business activities including fast food outlets, motor vehicle dealers, real estate, domestic cleaning, lawn-mowing, licensed post offices, lottery agents, taxis, bakery outlets, hair dressing, grocery stores, book stores and courier services.
"When necessary, the ACCC has intervened in cases where there is an alleged breach of the Franchising Code of Conduct and particularly when that breach is accompanied by allegations of unconscionable conduct directed at small business franchisees".
Copies of the revised consolidation of the Franchising Code of Conduct together with an explanatory statement can be obtained from the Attorney-General's website SCALEplus (at law.gov.au). Hardcopies of the amendments to the code and the consolidation will be on sale in AusInfo bookshops. Copies of the consolidation of the code will also available on the ACCC website following formal release by the Attorney-General's Department.