The franchisor compliance manual

The ACCC's approach to non-compliance

The ACCC’s Compliance and Enforcement Policy outlines the ACCC’s enforcement powers, functions, priorities and strategies and sets out the principles it adopts to achieve compliance with the law.

The ACCC determines the appropriate enforcement tools to address concerns on a case by case basis, taking into consideration the alleged contravention, the business involved and the impact of the conduct.

The Act provides for a number of sanctions and orders for non-compliance with the Code, including financial penalties for breaches of certain Code provisions. If you fail to comply with a penalty provision, the ACCC may take the matter to court, seeking a penalty of up to $63 000 for each breach. Other orders a court can make include:

  • injunctions to stop the conduct or to require some action to be taken
  • compensation and damages
  • disqualification orders to prevent directors from managing corporations for a period of time.

Alternatively, the ACCC may issue an infringement notice of $10 500 on a body corporate (or $2100 on an individual or unincorporated entity) which it has reasonable grounds to believe has contravened a penalty provision.

The Act also confers upon the ACCC the ability to accept formal undertakings in which the ACCC and the party agree to certain actions, such as admitting a contravention, stopping the offending conduct or requiring the non-compliant party to review its compliance program (or, in the absence of a such a program, setting one up). If one of these undertakings is breached, the Federal Court may make enforcement and compensation orders.

The ACCC can also resolve a matter administratively at any stage of the investigation process (for example, by a franchisor agreeing to stop the conduct and compensate those affected).

Information gathering powers

The ACCC can use a range of tools to gather information and documents that may assist with the investigation of an alleged breach of the Code or the Act, or to monitor your compliance with the Code.

Compliance check power

Section 51ADD of the Act gives the ACCC the power to require you to provide information or documents that you are required to keep, generate or publish under the Code. This may include disclosure documents, franchise agreements, marketing fund statements, documents provided to you by a prospective or existing franchisee, or documents that you rely upon to support a claim in your disclosure document. If you are issued with a written notice, you have 21 days to produce the documents.

Power to obtain information, documents and evidence

Section 155 of the Act gives the ACCC the power to obtain information, documents and evidence when investigating possible contraventions of the Act. This power can be used by the ACCC where there is reason to believe that the information, documents or evidence being sought are relevant to the investigation. Criminal penalties apply for failing to comply with a section 155 notice.

Substantiation notices

The ACCC can require you to substantiate a claim or representation you have made to a franchisee or prospective franchisee regarding the supply or possible supply of goods or services. This includes entering into a franchise agreement. If you are issued with a substantiation notice, you have 21 days to respond.

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