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Reforms seeking greater fairness in franchising pass Senate

Adrian Flores
Adrian Flores
23 February 2021 1 minute readShare
Senate

Laws seeking to amend the Franchising Code to include an optional binding alternative dispute resolution path for small businesses has passed through the Senate.

Introduced by Labor senator Deborah O’Neill, the Franchising Laws Amendment (Fairness in Franchising) Bill 2020 passed the Senate on 22 February.

The bill has subsequently been introduced to the House of Representatives and has been read a first time.

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The reforms aim to address the power imbalance in franchising against franchisees by giving the Australian Small Business and Family Enterprise Ombudsman the power to assist with having matters resolved by arbitration in circumstances where mediation has failed or if both parties to a franchising dispute otherwise agree.

It does this by establishing a mediation and franchising adviser within the ombudsman’s office with the power to appoint arbitrators to resolve the disputes.

 

Further, the bill will enable multi-party resolution of franchising disputes and give the ombudsman the power to assist with multi-party mediation and arbitration, and is relevant to franchising where multiple parties can have the same issues that require resolution.

Lastly, there will be a significant increase of the range of penalties available for breaching the Franchising Code of Conduct to create a greater deterrent.

When the bill was introduced to Parliament in September last year, ASBFEO Kate Carnell called it “a welcome change” that will help them more effectively resolve disputes.

“I remain concerned that the response’s commitment to ongoing consultation will further delay the changes that everyone in the sector knows are sorely needed,” Ms Carnell said.

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Franchises have been particularly hit hard by the coronavirus crisis in terms of revenue, with a Franchising Council of Australia survey revealing that 46 per cent of survey respondents reported revenue was less than 50 per cent compared to the June 2019 quarter.

The hardest hit businesses include cafés, restaurants, fitness clubs, accommodation and child-related services.

Reforms seeking greater fairness in franchising pass Senate
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Adrian Flores
Adrian Flores

Adrian Flores is the deputy editor of MyBusiness. Before that, he was the deputy editor for SMSF Adviser as well as features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at [email protected].

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