Legislation introduced into the South Australian Parliament
could have a significant impact on the way franchisors conduct
business in that state. The legislation will affect both
Australian and international franchise operators in South
Australia. Industry bodies have already expressed concern about the
potential reach of the legislation.
The Minister for Small Business, Tom Koutsantonis stated in a news
release that 'for far too long small businesses, franchisees
and tenants have felt powerless when dealing with unfair practices
of franchisors, larger businesses or large scale landlords... this
legislation will give them a voice, a champion to help them through
tough times, disputes and compliance issues'.
The Small Business Commissioner Bill 2011 (SA) still needs
to pass through Parliament in order to become law. The Bill
will not be debated until the next sitting day, which is 13
The Small Business Commissioner
The legislation will establish a new office of the Small
One of the key functions of the Small Business Commissioner is to
receive and investigate complaints by small businesses regarding
their commercial dealings with other businesses, and to provide a
dispute resolution service.
The Bill is intended to take into account lessons learned from the
model provided by the Victorian Small Business Commissioner, which
has demonstrated its ability to resolve a high proportion of
disputes through mediation. Since its establishment in 2003,
the Victorian Small Business Commissioner has reportedly been
involved in more than 8,000 matters.
Other functions of the Small Business Commissioner include:
monitoring, investigating and advising the Minister about
non-compliance with industry codes, including the Franchising Code
of Conduct, that may adversely affect small businesses
assisting small businesses in their dealings with state and
local government bodies
disseminating information to small businesses, to assist them
in making decisions relevant to their commercial dealings with
other businesses and their dealings with state and local government
The Bill also provides that the Small Business Commissioner is
to perform its functions with a view to developing and maintaining
relationships between small businesses and others that are based on
dealings conducted fairly and in good faith. Although the
intent of this provision is unclear, it clearly applies to
How will this affect franchisors and franchisees?
The Australian franchising sector is comprised mainly of small
businesses, and one of the Franchising Code of Conduct's
governing concepts is mandatory dispute resolution
If the Bill becomes law, small businesses in South Australia
will have access to a new dispute resolution process.
Franchisees and franchisors alike should be aware that the Small
Business Commissioner will provide a dispute resolution process,
which is designed to avoid the high costs of litigation.
However, the other ways in which the Bill may impact the
franchising sector in South Australia are uncertain. In
particular, the Bill, if it becomes law, would enable penalties for
contravention of an industry code to be prescribed by
regulation. In future the South Australian government could
use this power to impose penalties of up to $50,000 for
corporations, and up to $10,000 for individuals, who breach of the
Franchising Code of Conduct.
The Bill will be watched closely by the franchising industry, and
franchisors in particular.
This publication is intended as a general overview and
discussion of the subjects dealt with. It is not intended to be,
and should not used as, a substitute for taking legal advice in any
specific situation. DLA Piper Australia will accept no
responsibility for any actions taken or not taken on the basis of
DLA Piper Australia is part of DLA Piper, a global law firm,
operating through various separate and distinct legal entities. For
further information, please refer to www.dlapiper.com
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On 12th November 2016, new laws will commence to protect small businesses from unfair terms in standard form contracts.
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