In our final article on the Wein review, we look at the last few
That subclause 20(4) of the Code be amended to
a) The franchisor is taken to have given consent to the
transfer or novation if the franchisor does not, within 42 days
after the request was made, or all information reasonably required
by the franchisor under the franchise agreement has been provided,
whichever is the latter, give to the franchisee written
i. that consent is withheld; and
ii. setting out why consent is withheld
b) The franchisee should take all reasonable steps to
provide all information required under the franchise agreement to
enable the franchisor to be able to properly evaluate the
The Government has accepted this recommendation in principle.
Despite the proposed introduction to act in good faith, various
issues surrounding the suggested wording arise, for example, if a
franchisor does not provide consent does it mean that they are not
acting in good faith?
The intent of the recommendation is to ensure that a franchisor
has the information reasonably required to make a decision about
the transfer or novation of a franchise agreement. Ultimately, the
42 day period for the decision process will only commence when the
franchisee has provided all the information the franchisor
reasonably requires under the franchise agreement to make an
informed decision. However, any amendment to the Code needs to
ensure that it doesn't give an unintentional right to one party
to frustrate or delay the transfer or novation by making multiple
requests for additional information from the other party, in effect
restarting the 42 day period again and again.
Subsequently, the Government has suggested that the clarity of
franchisee agreements should be improved through the
standardisation of paragraphs concerning the information that
should be provided when a franchisor or franchisee seeks a transfer
or novation of the agreement, which would help thwart any
franchisor's unreasonable delay in considering and granting
The Competition and Consumer Act 2010 (the CCA) be amended
a) allow civil pecuniary penalties to a maximum of $50 000
to be available as a remedy for a breach of the Code
b) allow the ACCC to issue an infringement notice for a
breach of the Code;
c) allow the ACCC to use its powers under section 51ADD of
the CCA (its random audit powers) to assess a franchisor's
compliance with all aspects of the Code, not just to require the
production of documents created under the Code.
The Government has agreed to give the ACCC powers to seek
pecuniary penalties for Code breaches. Some suggestions have
been made that a breach for failing to prepare a disclosure
document would incur a fine of $50 000 whilst failing to update a
disclosure document would incur a fine of $5000. However, the
Government has clearly stated that it will reach its own conclusion
on the amounts to be fined for the various breaches. Further
any penalties imposed under the Code, will not apply to other
industries– just franchising!!
The Government believes that a combination of infringement
notices along with penalties will encourage further compliance with
the Code. It is important to ensure that these penalties are not
too severe as there are genuine interpretational difficulties with
quite a number of aspects of the Code. In order to ensure
certainty within the sector there would be a need to clarify these
interpretational uncertainties and the ACCC may also be granted the
ability to make interpretational rulings and publish clear
There should not be another review of the Code for a minimum
of five years after any amendments to the Code take effect in
response to this report.
The Government has accepted this in principle as the multiple
reviews, including this review, have generated uncertainty and
fatigue within the industry and it is agreed that some time needs
to be given to the sector before the effects of the amendments can
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We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
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