The Australian Competition and Consumer Commission (ACCC) now has further power to penalise business after the Coalition Government passed a new Franchising Code of Conduct.
The ACCC can now apply civil penalties of up to $8,500 if a franchisor or franchisee is found guilty of breaching the Code and the Court has the power to impose a pecuniary penalty of up to $51,000 for these breaches.
Minister for Small Business, Bruce Billson described the penalties as ‘reasonable and moderate’, and assured that the penalties will relate to “provisions of the Franchising Code of Conduct that are fundamental to the purpose of the Code and where non-compliance is likely to cause significant detriment to the other party.”
The Government has approved the reforms to ensure that franchisees and franchisors act in good faith in their dealings with each other, to improve transparency of marketing funds, and to improve disclosure for prospective franchisees.
Michael Paul, Franchise Council of Australia Chairman, said the FCA was pleased with the Government’s consultation process since the update to the Code was put in motion in January 2013.
“It appears our concerns in relation to the broad application of penalties, and the potential for them to apply to trivial breaches, have been addressed by the Minister. We support the introduction of penalties to deal with those businesses that seek to masquerade as franchises or ignore or commit flagrant breaches of the Code,” Paul said.
The new Franchising Code of Conduct is to take effect from 1 January 2015.