Franchise Council welcomes Government reforms

Posted by Nicole Eckersley on 9th March 2010

Small Business Minister Dr Craig Emerson last week announced sweeping reforms of the Franchising Code of Conduct, including the requirement to provide plain-English disclosures of rights and responsibilities to potential franchisees.

The Australian Franchise Council welcomed the reforms, saying that “the FCA welcomes both the Government decision and the recommendations by the expert panel, especially the decision against creating both new rules for good faith or unconscionable conduct in the franchising code of conduct.”

Franchisors will be asked to provide a plain-English document outlining responsibilities regarding unconscionable conduct, unilateral contract variations, unforeseen capital expenditure, attribution of legal costs, confidentiality agreements and the sale of the business.

Franchises will continue to be regulated by the Trade Practices Act, and Dr Emerson encouraged the ACCC and other regulators to take a “robust attitude to enforcing the law, both to provide a deterrent for inappropriate business conduct, and to build the body of case law to inform our common understanding of the law.”

“Australian franchises employ more than 400,000 people and turn over around $130 billion a year – that’s a lot of jobs and a lot of money,” Dr Emerson said.  The Australian Franchise Council has over a hundred different food-related member franchises, including cafes, restaurants, bakeries, coffee vendors and juice bars.