The Franchise Council of Australia has responded in detail
to the thorough and quite extensive recommendation of the
recent franchising inquiries in Western Australia and South
Australia as a precursor to preparing its submission to the
proposed Federal Government inquiry into franchising.
In relation to the big ticket recommendations, the FCA's
position is as follows:-
The FCA is strongly supportive of proposals to improve
the amount and quality of educational information available
to franchisees and prospective franchisees.
The FCA opposes the recommendation to create a mandatory
federal registration scheme for franchise disclosure
documents, administered by the ACCC. The FCA believes
registration (which will not include any vetting of
documents) will simply be an additional bureaucratic process
that will add nothing other than significant extra cost to
the current regime, and registration with the ACCC could be
seen as an endorsement of the franchise.
The FCA opposes the recommendation that the Code be
amended to require the franchisor to provide continuous
disclosure of all issues.
The FCA supports recommendations for minor improvements
to the disclosure document content to provide franchisees
with better quality information.
The FCA rejects the recommendation that franchisors be
required to prepare a risk statement for all franchisees, but
supports the provision by the ACCC of information which
describes the risks and consequences of franchisor failure
and the operation of businesses generally.
The FCA does not support the recommendation to remove the
audit certificate exemption, provides a reasonable
alternative for private companies not wishing to make public
their actual financial statements.
The FCA does not support the recommendation to include a
requirement to disclose not just that rebates are paid and to
whom, but the amount or the methods of calculation of any
rebates and/or other financial or commercial benefits.
The FCA rejects the recommendations to enact a statutory
definition of unconscionable conduct and of good faith, and
to legislate in relation to franchisee entitlements to
compensation on termination.
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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