The federal government has released plans to improve transparency in the $180 billion franchising sector that’s often plagued with disputes between franchisees and franchisors.
The draft amendments, which were announced as part of the May 2021 budget, will see the establishment of a new disclosure register if they pass Parliament.
Treasury is leading the consultation, allowing the public to provide feedback about the proposal until the end of October.
The proposed changes to the Franchising Code of Conduct include creating a register that will act like a portal where franchisors are legally required to upload information for prospective franchisees to access.
Announcing the draft amendments, small business minister Stuart Robert said the register builds on reforms to the franchising code which took effect on July 1 this year.
“The franchising sector makes a valuable contribution to the Australian economy, and the Morrison government is committed to supporting the sector through increased transparency and accountability,” Robert said.
Franchising reforms come after a 2019 report revealed regulation of the industry amounted to systemic failure.
The damning Senate report proposed sweeping changes to the regulatory code through 71 recommendations.
The recommendations featured giving the Australian Competition and Consumer Commission (ACCC) more power to police misconduct in the sector.
The report also proposed an expansion of civil penalties and infringement notices to all breaches of the franchising code to bring them in line with Australian Consumer Law (ACL).
Some of the report’s recommendations were adopted by the federal government and took effect in June.
Those changes allow the Small Business Ombudsman to appoint a mediation or arbitration adviser to help resolve franchising disputes.
Franchisors must also meet more requirements when drafting their franchise agreements, while franchisees can now exit agreements more easily.
“We are getting on with improving the sector and continue listening closely to the thousands of local franchise businesses who need a hand,” Robert said.
If the government’s proposed register becomes law, franchisors will be required to upload information on the free public portal by November next year.
Courtesy Smart Company