A parliamentary inquiry into the franchising industry handed down its report in March.
The report has made 71 recommendations, which if adopted, will see a significant change to how the franchising industry in Australia will operate.
The bipartisan report was damming in its review and called for new laws and greater enforcement powers to the regulator.
The $170 billion industry in Australia has seen significant disputes between franchisors and franchises.
The report described the current regulatory environment as having, “manifestly failed to deter systemic poor conduct and exploitative behaviour and has entrenched the power imbalance”.
The report also found rampant underpayment, unfair contracts and an imbalance of power between franchisees and franchisors are some of the commonly raised issues.
Disturbingly the report drew parallels between the franchising sector and the behaviour uncovered by the Banking Royal Commission.
The report recommends the taskforce examine making unfair contract terms in franchise agreements illegal, investigate options for a public franchise register with franchisors providing updated disclosure documents, and template franchise agreements annually.
It recommended civil penalties if franchisors fail to comply.
The report calls for the ACCC, the Australian Taxation Office and the corporate watchdog, the Australian Securities and Investments Commission, to launch investigations into embattled Retail Food Group, its current and former directors and officers for potential insider trading, tax evasion, quality of audit, directors’ duties and continuous disclosure.
The report called on the government to establish a taskforce to consider and implement the recommendations.
In response Small Business Minister Michaelia Cash said the establishment of an inter-agency taskforce was the first recommendation of the committee.
She said the government had now set up that taskforce and that it would examine the feasibility and implementation of the committee’s other recommendations.
Wondering about the franchising industry and want more help?
At FC Lawyers, our team has years of experience in dealing with franchising matters for both Franchisors and Franchisees. Expert advice is important in this complex area of law and business.
Contact our team of Franchising lawyers today to discuss your legal needs.
The information provided in this article is for general information and educative purposes in summary form on legal topics which is current at the time it is published. The content does not constitute legal advice or recommendations and should not be relied upon as such. Whilst every care has been taken in the preparation of this article, FC Lawyers cannot accept responsibility for any errors, including those caused by negligence, in the material. We make no representations, statements or warranties about the accuracy or completeness of the information and you should not rely on it. You are advised to make your own independent inquiries regarding the accuracy of any information provided on this website. FC Lawyers does not guarantee, and accepts no legal responsibility whatsoever arising from or in connection to the accuracy, reliability, currency, correctness or completeness of any material contained in this article. Links to third party websites or articles does not constitute any endorsement or approval of those sites or the owners of those sites. Nothing in this article should be construed as granting any licence or right for you to use that content. You should consult the third party’s terms and conditions of use in relation to any third-party content. FC Lawyers disclaims all responsibility and all liability (including liability for negligence) for all expenses, losses, damages and costs you might incur as a result of the information being inaccurate or incomplete in any way. Appropriate legal advice should always be obtained in actual situations.
Prefer to get in touch?
With offices in Brisbane, Sunshine Coast and Sydney, our team is well equipped to provide both advice and support across a broad range of legal areas.