The Australian Competition and Consumer Commission (ACCC) will have stronger enforcement powers to ensure compliance with the Franchising Code of Conduct, according to a proposed increase of powers to raise the stakes from 1 January 2015.
The proposed draft of the new Code released in April 2014 will see the ACCC in a position to fine those in serious breaches of the Code with fines of up to $8,500 and seek penalties of up to $51,000 in the Federal Court.
ACCC Deputy Chair Dr Michael Schaper, addressing the National Franchise Convention’s Legal Symposium in Sydney on Sunday, says the proposed power increase will hinder “rogue operators”.
“Infringement notices will allow us to move swiftly to deal with what we believe to be breaches of the Code, while the court penalties will provide more teeth in deterring rogue operators,” Dr Schaper said.
“The changes are likely to go unnoticed by franchisors and franchisees who do the right thing. However, the new powers are likely to play an important role in achieving compliance with the Code.”
An introduction of a good faith obligation is also a possibility, which Dr Schaper says will require both parties to a franchise agreement to maintain loyalty to the contract.
“Acting for an ulterior purpose, or in a way that undermines or denies the other party the benefits of the contract are examples of conduct that may qualify as bad faith,” says Dr Schaper.
“While good faith requires you to have regard to the rights and interests of the other party, it does not prevent you from acting in your own legitimate commercial interests.”
In order to help franchises prepare for the changes, the ACCC will be holding a free webinar on 9 December 2014.