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.
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