Government to strengthen $130 billion franchising sector

July 24, 2013

The Australian Government today moved to strengthen and improve Australia’s $130 billion Franchising Sector by responding to the 2013 Independent Review of the Franchising Code of Conduct.

Releasing the Government’s response, the Minister for Small Business Gary Gray said the Code would deliver better outcomes and provide certainty for franchisors and franchisees.

“The government will move to introduce into the code an obligation to act in good faith, and to include civil pecuniary penalties for breaches of the code,” Mr Gray said.

“The Government will also address other areas of concern, including marketing funds and disclosure and will seek to provide certainty by accepting in principle that once implemented, another review of the sector will not occur for five more years.”

Mr Gray said the reforms were important because they clarified the obligations under the Franchising Code of Conduct and ensured that the courts and the Australian Competition and Consumer Commission had the appropriate powers to deal with rogue operators who abused their power in a franchising relationship.

Mr Gray hoped for a positive and bipartisan approach to these reforms from the Coalition and said, “I have written to my Shadow Minister, Bruce Billson about these reforms.”

Mr Gray also acknowledged the ongoing support of several former Ministers and Shadow Ministers for Small Business: Judi Moylan, Fran Bailey, Chris Bowen, Brendan O’Connor and others on the long road to develop the changes.

Parliamentary Secretary for Small Business, Bernie Ripoll said after consultation with stakeholders on the review recommendations, the Government was confident that industry engagement on the issues had been comprehensive.

“With over 160 responses to the consultation paper, we have a solid evidence base for our reforms,” Mr Ripoll said.

“The strong response shows healthy engagement from businesses and people with an interest in franchising.”

“The Government is determined to implement these changes to provide national consistency in franchising regulation in Australia and ensure the sector continues to grow and diversify by enhancing the confidence of its participants.”

“Some of these changes arise from the bipartisan recommendations in the report I compiled as Chair of the Parliamentary Joint Committee on Corporations and Financial Services in 2008.”

“A strong, stable and effective franchising system safeguards the more than 400,000 franchise sector employees right across Australia.”

The Government will move to implement its response through the Parliament as soon as practically possible.

The detailed response can be viewed at: www.innovation.gov.au