Australia - ACCC powers expanded under new Franchising Code of Conduct
On 1 January 2015, a new mandatory Franchising Code of Conduct (Code) was introduced in Australia.
The new Code contained a breadth of changes to the previous Code and introduced new obligations and requirements for franchisors. The changes followed a review of the previous Code which highlighted the need to remove excessive regulation and encourage competition and best practice.
Some of the more important changes relate to disclosure requirements for franchisors and providing increased protection for franchisees in an attempt to balance the distribution of power between franchisors and franchisees.
Importantly, the new Code gives the Australian Competition and Consumer Commission (ACCC), the body responsible for regulating the Franchising Code of Conduct, expanded powers of investigation and enforcement of alleged breaches of the Code. The ACCC will now be able to issue infringement notices or commence court proceedings against infringers, as a breach of the Code will now amount to a breach of the Competition and Consumer Act 2010 (Cth).
If proceedings are initiated, financial penalties of up to $51,000 will be available for breaches of various Code provisions. Further, the ACCC will be able to issue infringement notices of up to $8,500 for body corporates and $1,700 for individuals. Each of these new penalties will be applied on a "per contravention" basis, resulting in increased financial consequences for parties who are proven to have repeatedly breached the Code.
For more information, please contact Anne-Marie Allgrove , Toby Patten or Jarrod Bayliss-McCulloch.