Second on ACCC chairman Rod Sims' "to do" list for 2013 is the ACCC seeking new powers to fine franchisors as more franchisees complain of businesses operating a franchise system under the guise of a licensing or distribution arrangement in an attempt to bypass the Franchising Code.
The ACCC would prefer an enforceable Franchising Code that carries pecuniary penalties.
To enforce the Franchising Code, the ACCC currently has to go through the process of bringing a case before the court and getting a court ruling, then brining another case before the court, proving that the franchisor has breached the prior court ruling. For obvious reasons, it takes a significant amount of time and resources to enforce the Franchising Code.
ACCC deputy chairman Michael Schaper is quoted in Business Review Weekly (21 -27 March, 2013) as stating that "Codes remain an intention of good practice and good behaviour, and most adhere to the code but there will be some who realise they can breach the code without penalty".
In its submission to the review of the Franchising Code the ACCC outlined why it should be granted wider enforcement capabilities, including pecuniary penalties. The review of the Franchising Code is considering (among other things) the enforcement of the Franchising Code and a full report is due to be released by 15 May, 2013.
K&L Gates will keep you informed regarding the content of the report and any changes to the pecuniary penalty regime.
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