On 2 April 2014, the Coalition Government released a draft Franchising Code of Conduct ("Code") along with draft legislation to amend the Competition and Consumer Act 2010 (Cth).
The draft materials broadly reflect the recommendations of Mr Alan Wein’s independent Review of the Franchising Code of Conduct ("Review"), released in 2013, as well as extensive consultation with stakeholders in the franchise industry. The recommendation in the Review were, for the most part, accepted, or accepted in principle, by the Labor Government in 2013, but were not implemented due to the 2013 Federal Election.
The Coalition’s reforms aim to, among other things:
- reduce red tape by removing unnecessary disclosure obligations from the Code;
- ensure franchise participants act in good faith during transactions, negotiations, dispute resolution and franchise renewals;
- improve disclosure procedures, including by requiring franchisors to provide a statement outlining the "risks and rewards" of franchising to prospective franchisees;
- address the imbalance in franchise agreements between franchisors and franchisees; and
- enhance enforcement capabilities by empowering the ACCC to deal with serious breaches of the Code.
The Government has accepted submissions on the draft materials, but only regarding the technical aspects of implementing the changes, as an extensive consultation process has already occurred. It is expected that, if implemented, the changes will take effect from 1 January 2015.
To view the draft Code, click here.