2 April 2014

Government seeks to strengthen franchising sector


This media release anoounced that the Government is seeking to strengthen franchising sector.

The Federal Government will seek to make changes to improve the viability of the franchise sector by the end of the year and save it $8.6 million in red-tape.

The 'Future of Franchising' statement released by the Government today outlines plans to build on a review of the sector by Alan Wein last year and introduce penalties for breaches of the Franchise Code of Conduct to protect small business owners.

The Government has settled on the policy direction for franchising in light of this review and started work on legislative changes to improve the sector for its participants.

These changes will help cut red-tape by clarifying and streamlining the Code and removing unnecessary provisions.

This red tape reduction for the Franchising Code is estimated to save businesses $8.6 million annually and will allow more opportunities for resources to be invested back into franchise systems to drive productivity, innovation and jobs.

The proposed changes strike the right balance between the needs of franchisors and franchisees and the unique nature of the relationship between the two.

The Government is committed to:

  • ensuring franchisees and franchisors act in good faith in their dealings with each other;
  • introducing penalties for a breach of certain provisions of the Franchising Code along with enhanced audit powers for the Australian Competition and Consumer Commission;
  • improving the transparency of marketing funds; and
  • improving disclosure including short form, easy to understand information for prospective franchisees.

To ensure the changes are implemented in partnership with the sector, the Government has also today released the exposure draft bill and regulations amending the Franchising Code of Conduct for public feedback.

These documents are available at the Treasury website for a consultation period ending 30 April 2014.

The Government looks forward to receiving stakeholder comments on the implementation of these important reforms in Australian franchising regulations.