In a recent
speech, ACCC Chairman Rod Sims announced the ACCC's
enforcement and compliance priorities for 2015. Of particular
importance for participants in the franchising sector, one of the
ACCC's priorities will be compliance with industry codes,
particularly the Franchising Code of Conduct.
This announcement of the ACCC's priorities coincides with
the ACCC's expanded enforcement powers from 1 January 2015. The
ACCC can now issue infringement notices with fines of up to $8,500
for breaches of certain provisions of the Franchising Code and can
also seek civil penalties of up to $51,000 per breach.
The ACCC also recently released its biannual Small business in focus report, offering insight into
regulatory activity in the franchising space for the second half of
2014. In respect of compliance with the Franchising Code, the
report reveals that, in the last year, disclosure related
complaints outstripped termination issues three to one. This is a
trend that continued from 2013, although the total number of
complaints had reduced.
These recent announcements from the ACCC and the new penalty
regime under the Franchising Code put franchisors on notice that
they must ensure they take active steps to comply with the new
The steps franchisors should take include:
reviewing their franchise agreements for compliance;
completely replacing their current disclosure document with a
document in the new mandatory format; and
issuing general franchise information statements to all
potential new franchisees.
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Australian Law Firm (revenue less than $50m)
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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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