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Small firms struggle with franchises

SMALL business is battling to understand franchising guidelines, warns the Australian Society of CPAs.

In its review of the Franchising Code of Conduct, the Society has called for the implementation of a mandatory franchising code following high levels of disputation under voluntary standards.

Franchising is one of the most common ways Australians choose to enter small business as it usually provides a framework for first timers to use.

CPA Small Business Adviser Kerrie Clayton said disclosure requirements were crucial to ensure small business owners can make informed decisions when considering buying into a franchise.

“The Federal Government must ensure small business has a clear understanding of how the code impacts on their operations,” Ms Clayton said.

“The current code exists to protect small business and unless they are familiar with its contents they run the risk of ill-informed decision-making and increase the likelihood of

disputes.

“There is wide-spread confusion among small business about the definition of a franchise.

“Much of this confusion stems from the fact that many businesses not traditionally considered franchise operators are covered by the code, such as newsagents acting as licensed agents for State lotteries.

“The code must be simplified and written in ‘plain English’ as a means to facilitate its use.”

The CPA submission follows calls for industry comment on the Franchising Code of Conduct.

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