03/04/2014 - 13:09

Franchise council criticises reforms

03/04/2014 - 13:09

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The Franchise Council of Australia has criticised planned federal government reforms, claiming there is inconsistency between Small Business Minister Bruce Billson’s stated intentions and draft changes to the franchising code of conduct.

Franchise Council deputy chairman Stephen Giles.

The Franchise Council of Australia has criticised planned federal government reforms, claiming there is inconsistency between Small Business Minister Bruce Billson’s stated intentions and draft changes to the franchising code of conduct.

Mr Billson announced details of the reforms on Wednesday, saying they struck the right balance between the needs of franchisors and franchisees.

The draft changes followed a review of the sector by Alan Wein, which was supported by the Franchise Council.

Key changes include fines of up to $51,000 for serious breaches of the franchising code.

The changes also introduce a general duty on franchisees and franchisors to act in ‘good faith’ in their dealings with each other.

Franchise Council deputy chairman Stephen Giles said while the news was generally good, there were some inconsistencies that needed to be addressed.

“Unfortunately some of the drafting in the exposure draft of the code that accompanied the minister’s announcement is not consistent with the minister’s statement, and does not reflect the Wein report recommendations,” Mr Giles said in a statement.

“Of particular concern is a new statutory definition of ‘good faith’, which seems to fly in the face of the Wein report recommendation that the Code simply be amended to incorporate the current common law duty. 

“The FCA supported that position, but does not support the new wording, which will create unnecessary legal uncertainty, disputation, and compliance cost.”

Mr Giles said another concerns was a new civil penalty for failure to act in good faith, which he said had never been the subject of any public discussion and ran contrary to the Wein report recommendations.

“Across the board, the proposed new penalty provisions also appear to need some work,” he said.

“However, the amounts attached to the new provisions of up to $51,000 through the court, and up to $8,500 for infringement notices without court action are sensible dollar amounts.

“The ACCC has assured the FCA and the sector penalties will be used to stop ‘fly-by-night’ franchise operations and scammers.”

The planned reforms are open for a consultation period ending April 30 2014.

The largest franchise groups in Western Australia are Jim’s Group, Jani-King Australasia, CleanTastic Perth, Bakers Delight, Chicken Treat, Red Rooster, Puma Energy and Dome Coffees Australia, according to Business News IQ.

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