ACCC gets new powers to enforce franchising code of conduct

The Abbott Government has passed legislation to increase compliance and reduce disputes in the franchise sector with franchisors and franchisees who breach the new Franchising Code of Conduct facing penalties of up to $51,000.

The Abbott Government has passed legislation to increase compliance and reduce disputes in the franchise sector with franchisors and franchisees who breach the new Franchising Code of Conduct facing penalties of up to $51,000.

The Competition and Consumer Amendment (Industry Code Penalties) Bill 2014 passed the Senate with bipartisan support and will give the Australian Competition and Consumer Commission (ACCC) stronger powers and greater flexibility in how it enforces the Code.

The Abbott Government said it is driving sector reforms as part of a wider package of changes to the Franchise Code to strike the right balance between the needs of franchisors and franchisees and the unique nature of the relationship between them. 

In a media release, Minister for Small Business Bruce Billson said the Government is committed to:

• Ensuring franchisees and franchisors act in good faith in their dealings with each other;
• Improving the transparency of marketing funds; and
• Improving disclosure including short form, easy to understand information for prospective franchisees.

The ACCC will have the power to issue infringement notices of $8,500 to franchisors and franchisees who breach a civil penalty provision and the Court will have the power to impose a pecuniary penalty of up to $51,000 for these breaches. Additional reforms to the Code are expected to be introduced later this year, with the new code set to take effect from January 1, 2015.

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