28 Oct Australian Government response to the Fairness in Franchising Report
The Parliamentary Joint Committee’s Fairness in Franchising report revealed a range of problems in the franchising sector. Franchising regulation needs reform to restore confidence in the sector.
The Australian Government has now prepared its response to the Parliamentary Joint Committee’s 2019 report.
The Australian Government will:
- double the penalties that apply for breaches of the Franchising Code.
- strengthen dispute resolution options by introducing conciliation and voluntary binding arbitration. Furthermore, the functions of the Franchising Mediation Adviser will be incorporated into ASBFEO (Australian Small Business and Family Enterprise Ombudsman) to improve the efficiency of dispute resolution assistance and make it clearer that ASBFEO can assist with franchise disputes.
- improve disclosure relating to supply arrangements, marketing funds.
- strengthen the ability of franchisees to exit the agreement before the end of the term and increase disclosure of end-of-term arrangements for goodwill. The Government will balance the rights of franchisors and franchisees to facilitate and negotiate an early exit from a franchise agreement.
- to strengthen franchisees’ rights when a demand for significant capital expenditure is made.
- introduce a public register of franchisors to increase transparency in the sector.
- develop a franchising website to make it easier for both franchisors and franchisees to access information and support.
- prohibit franchisors unilaterally imposing significant capital expenditure on franchisees during the term of an agreement.
It is hoped that these reforms will be implemented soon. In the meanwhile, we at Belperio Clark can assist those in franchising with the issues highlighted in both these documents. It is better to be prepared than to react later.
You can access the full Fairness in Franchising Report here
You can access the full Australian Government Response here
For more information, please contact Belperio Clark on 8212 1322.
Prepared by Eugene Reinboth – Belperio Clark