AMENDING REGULATIONS
On 4 June 2010, the Minister for Small Business, Independent Contractors and the Service Economy, the Hon Dr Craig Emerson MP, issued a media release outlining regulatory changes to the Franchising Code of Conduct which came into effect on 1 July 2010.
The regulatory changes give effect to the Government’s reforms outlined in its responses to both the Parliamentary Joint Committee on Corporations and Financial Services’ report on franchising, and a report conducted by an expert panel commissioned by the Hon Dr Craig Emerson MP (see below for further information).
Please see this fact sheet developed by the Australian Competition and Consumer Commission (ACCC) for a summary of the changes to the Franchising Code of Conduct.
Small Business Mediation Services
On 11 May 2010 the Australian Government announced $2.7 million in funding to support the introduction of the early intervention dispute resolution services and the continuation of formal mediation services under the Franchising Code of Conduct, Horticulture Code of Conduct, Oilcode and Produce and Grocery Industry Code of Conduct. Please see the media release for further information. The Department has also developed a fact sheet on this initiative.
Commonwealth Parliamentary Joint Committee on Corporations and Financial Services Inquiry into Franchising
On 1 December 2008, the Joint Committee tabled its Report – 'Opportunity not opportunism: improving conduct in Australian franchising' (.pdf, 1.34MB) in Parliament. The Joint Committee made 11 recommendations for improving conduct within the sector.
On 5 November 2009, the Australian Government tabled its response to the Commonwealth Parliamentary Joint Committee on Corporations and Financial Services (Joint Committee) franchising inquiry report (.pdf, 112KB).
On 5 November the Government also issued a joint media release on the Government’s response to the Joint Committee’s franchising inquiry report, and Government response to the Senate Standing Committee on Economics (Senate Committee) inquiry report into the 'The need, scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act 1974'.
A Regulation Impact Statement (RIS) was prepared to inform the Government response to the Joint Committee's franchising inquiry report.
On 27 November 2009, Minister Emerson announced the establishment of an expert panel on franchising and unconscionable conduct. The panel provided advice to the Government on some outstanding issues raised in the Joint Committee's franchising inquiry and the senate Committee's inquiry into unconscionable conduct.
On 3 March 2010, Minister Emerson addressed the BRW franchising forum in Sydney releasing the expert panel’s report and indicating the Government’s support of the panel’s findings. The Minister's media release is available from Minister Emerson's website and the panel's report Strengthening Statutory Unconscionable Conduct and the Franchising Code of Conduct (.pdf, 866KB) is available on this site.
The Joint Committee and expert panel were informed by submissions and evidence from small business stakeholders within the franchising, business and academic sectors.
Background
The Franchising Code of Conduct (Franchising Code) (.pdf, 316KB) is a mandatory code that is prescribed under the Trade Practices Act. The purpose of the Franchising Code is to regulate the conduct of participants in franchising towards other participants in franchising. Broadly, it achieves this by requiring franchisors to disclose specific facts to franchisees and to follow set procedures in their dealings with franchisees.
The ACCC is responsible for the administration and enforcement of the Franchising Code.
The Australian Government funded Office of the Franchising Mediation Adviser assists franchisors and franchisees resolve their problems and disputes through mediation, which is often a less costly option to going to court.
In line with best practice guidelines, the Franchising Code was previously reviewed in 2006 by a committee led by Mr Graeme Matthews. On 31 October 2006, the Committee released its final Report (.pdf, 610 KB) (Matthews Report). On 6 February 2007, the former Government issued its response to the Matthews Report (.pdf, 60KB).
The Department also prepared a Business Compliance Cost (BCC) assessment (.pdf, 30KB) of the cost to business of complying with the Franchising Code amendments after receiving the Matthews committee recommendations.
For further information on any of the above, please email the Industry and Small Business Policy Division.