Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter

New powers for ACCC to strengthen franchising

Changes to the mandatory Franchising Code of Conduct came into effect on January 1, giving the Australian Competition and Consumer Commission additional powers.

The ACCC can now issue infringement notices of $8,500 for body corporates ($1,700 for individuals and other entities) and seek penalties of up to $51,000 in court for serious breaches of certain code provisions.

“The ACCC welcomes these changes to the Franchising Code as valuable additions to our arsenal. Rogue operators should be on notice that the ACCC can now seek significant penalties for serious breaches of the Code,” ACCC acting chair Dr Michael Schaper said.

“However, these new powers will go unnoticed by the vast majority of franchisors and franchisees who do the right thing.”

The changes introduce a good faith obligation into the code. This obligation requires both parties to a franchise agreement to remain loyal to the contract they have signed.

Advertisement
Advertisement

PROMOTED FEATURES


Acting dishonestly, for an ulterior motive or in a way that undermines or denies the other party the benefits of the contract, would breach the good faith obligation.

“Franchisees and franchisors will still be able to negotiate and make agreements in their own interest but this new obligation requires all parties to be honest and upfront in their dealings,” Dr Schaper said.

The code will also now require increased disclosure prior to parties entering a franchise agreement, greater transparency around the use of marketing funds, and clarity around whether the franchisor or franchisee can operate online.

The ACCC received more than 500 franchising-related complaints last year. Of these, one third related to disclosure matters so the improved disclosure requirements in the code will address a key concern.

“The ACCC will be focusing on particularly serious conduct and, as always, will take a common sense approach to enforcing the Code,” Dr Schaper said.

The new code applies to all franchise systems and franchisees across Australia.

New powers for ACCC to strengthen franchising
mortgagebusiness

Latest News

The federal government has unveiled a plan to overhaul responsible lending laws by shifting from a “lender beware” model to a “borrowe...

Housing affordability pressures have intensified for first home buyers in five of Australia’s major capitals, who now require more time to...

ASIC has directed fund managers to do more to remain “true to label” after finding that funds labelled as cash had assets other than cas...

FROM THE WEB
podcast

LATEST PODCAST: How lenders are viewing the property price outlook

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.