02/04/2014 - 15:34

Franchisors face fines

02/04/2014 - 15:34
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Franchise groups face fines of up to $51,000 for serious breaches of the Franchising Code of Conduct under draft reforms released today by the federal government.

The ACCC will be able to seek civil penalties of up to $51,000 from the courts, and issue infringement notices of up to $8,500 without having to seek a court order.

Franchise groups face fines of up to $51,000 for serious breaches of the Franchising Code of Conduct under draft reforms released today by the federal government.

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

The federal government said the changes would also save the sector $8.6 million per year in red tape, with thousands of franchise businesses affected.

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.

The draft changes follow a review of the sector by Alan Wein last year, and have been broadly supported across the sector, including by the Franchise Council of Australia.

They also follow moves by WA Liberal MP Peter Abetz to introduce similar reforms through state parliament in 2011.

The reforms advocated by Mr Abetz were heavily criticised by franchise groups, but there has been wider support for national reforms that apply in all states.

“These changes will help cut red tape by clarifying and streamlining the code and removing unnecessary provisions,” Small Business Minister Bruce Billson said in a statement today.

“The proposed changes strike the right balance between the needs of franchisors and franchisees and the unique nature of the relationship between the two.”

Mr Billson said the government was committed to enhanced audit powers for the Australian Competition and Consumer Commission.

The ACCC will be able to seek civil penalties of up to $51,000 from the courts, and issue infringement notices of up to $8,500 without having to seek a court order.

The government also seeks to improve the transparency of marketing funds and online sales arrangements, and improve disclosure to include short-form, easy-to-understand information for prospective franchisees.

The draft bill and associated regulations are open for a consultation period ending April 30 2014. 

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