ACCC vows to protect small business as franchises put under the spotlight

Last year Pizza chain Domino’s Pizza Enterprises became the first company to pay penalties for alleged non-compliance with the franchising code of conduct. Picture: AAP

The Australian
March 23, 2018
SAMANTHA BAILEY

The ACCC will be coming for national franchisors who are in breach of the Franchising Code of Conduct this year, as the competition watchdog turns its focus to the potential misconduct of the owners of Australia’s 70,700 franchises.

Nearly 5,000 small businesses contacted Australia’s Competition and Consumer Commission last year, which resulted in seven enforcement actions, including five for alleged breaches of the Franchising Code, as well as 29 compliance checks.

“The majority of small businesses that contact us are micro sized with less than four staff. We want small businesses to have a level playing field and every chance to succeed, so it’s our job to ensure everyone plays by the rules,” said ACCC deputy chair Dr Michael Schaper.

Misleading conduct, consumer guarantees issues and wrongly accepting payments are among the biggest issues faced by small businesses, according to the complaints made to the ACCC last year.

“We worked hard in 2017 to protect small businesses to ensure they’re not being unfairly treated, with a number of important firsts,” Dr Schaper said.

“We secured $177,000 in penalties for misconduct towards small businesses, including the first court ordered penalties for breaches of the Franchising Code.”

Last year saw the ACCC take its first court action to enforce new laws governing small business contract terms.

“We were successful in this matter, with the Federal Court declaring, by consent, the offending unfair terms void,” Dr Schaper said.

“We continue to investigate other potential breaches and have another matter currently before the Federal Court.”

Nearly $3 million was reported by small businesses to the ACCC last year as being lost to scams.

“Losing money to scams can be devastating to a small business and in some instances lead to them closing their doors,” Dr Schaper said.