Following a review of the disclosure provisions of Part 2 of the Franchising Code of Conduct (the Code), which included extensive consultation with the franchise industry; regulations were made to amend the Code. The amendments to the Code came into effect on 1 March 2008 and are aimed at increasing the transparency, quality and timeliness of disclosure of information by the franchisor to existing and prospective franchisees.
The ACCC has produced a Franchising Code of Conduct Amendments fact sheet to assist franchisors and franchisees in understanding their obligations under the Code. The fact sheet is available on the ACCC website at http://www.accc.gov.au/content/index.phtml/itemId/815467.
Background
The Franchising Code of Conduct is a mandatory code that is prescribed under the Trade Practices Act 1974. The purpose of the 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 Australian Competition and Consumer Commission (ACCC) is responsible for the administration and enforcement of the Code.
The Australian Government funded Office of the Mediation Adviser assists franchisors and franchisees resolve their problems and disputes through mediation, which is often a less costly option to going to court.
Review of the disclosure provisions of the Franchising Code
The most recent review of the Code was in 2006 and was prompted by a number of concerns raised by franchisees with the operation of the Code. The Report (
) of the Committee which undertook the review and the former Government's Response () to that Report were released on 6 February 2007. Mr Graeme Matthews, National Managing Partner, KPMG Middle Market Advisory led the review supported by a team from Corrs Chambers Westgarth. A secretariat was provided by the former Office of Small Business. The terms of reference for the review were:
- The Committee is to review the current operation of Part 2 - Disclosure of the Franchising Code of Conduct.
- The Committee is to identify, where justified, possible amendments that could improve the disclosure provisions of the Franchising Code of Conduct.
The Department undertook an assessment of the cost to business of complying with the Franchising Code amendments after receiving the Matthews committee recommendation. A copy of the Business Compliance Cost (BCC) Report is available here ().
For further information on any of the above, please email the Industry and Small Business Policy Division.