ANRA Welcomes Updated Franchising Code Of Conduct
Minister for Small Business Bruce Billson today announced the release of the code, containing amendments designed to get the “balance right between maintaining a level of regulation to foster the effective operation of the sector while reducing the overall regulatory burden”.
Billson stated the new code will deliver an “estimated $8.6 million per year of savings in administrative costs”, with some of its main features including:
– The introduction of a statutory obligation on franchisors and franchisees to act in good faith in their dealings with each other;
– A streamlined disclosure process that removes unnecessary information requirements;
– Improved transparency in how marketing funds are used and administered;
– More flexible and stronger enforcement options for the Australian Competition and Consumer Commission (ACCC), with the introduction of civil penalties for serious breaches of the new code, the ability to issue an infringement notice where appropriate, and expanded audit powers;
– An information statement that will give prospective franchisees essential information about the nature of franchising before they make a commitment to sign an agreement; and
– A reasonable and balanced restriction on the enforceability of restraint of trade clauses, that still recognises the legitimate interests of franchisors.
ANRA CEO Anna McPhee stated the new code contains a number of improvements.
“The new code will reduce business costs, improve confidence in the franchising system, and provide greater transparency and clarity around the roles and responsibilities of franchisors and franchisees,” McPhee commented.
“The inclusion of a ‘good faith’ obligation on both franchisees and franchisors and the streamlined disclosure process were recommendations put forward by ANRA in the consultation process in 2013 and are welcome improvements.”
McPhee added ANRA is pleased with comments by the Labor Party that “they will work constructively with the government to ensure the franchise sector continues to grow and prosper”.
The new code commences on January 1, 2015.