The Australian Competition and Consumer Commission (ACCC) is urging the franchising sector to work towards bettering its image, if it wishes to continue to see growth.
According to ACCC Chairman Rod Sims, the franchising sector is an important part of the local economy, and the watchdog will assist it to improve its standing by doing more to ensure compliance.
“Franchising offers many opportunities to entrepreneurs, young and old, but also many obstacles. The power imbalance in the franchise relationship too often leads to conflict, which is why the ACCC polices the franchising code of conduct.”
Sims said the ACCC will use new investigation powers to ensure that the regulatory regime promotes confidence in the franchising sector.
“The ACCC will continue to enforce the code of conduct and these new powers will allow the ACCC to do more, earlier, to support best practice in the industry.”
Sims comments came during the Franchising Council of Australia national convention in Melbourne, at which ACCC deputy chairman Michael Schaper also spoke.
Schaper described how new powers under the Competition and Consumer Act allow the ACCC to monitor compliance and seek the disclosure of documents that franchisors must provide under the Franchise Code of Conduct.
The ACCC can also investigate alleged breaches, giving franchisees the ability to complain without fear of reprisal.
“These new powers are designed to reassure potential entrants and existing franchisees that they will be provided with appropriate information from their franchisor throughout their contract,” Dr Schaper said.
“The ACCC will monitor compliance where there is a significant imbalance in bargaining power between industry participants. These new powers will put franchisors on notice to abide by the code of conduct and keep their records in order.”