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Australian Regulator Calls For Financial Penalties

With a review of 2010 changes to Australia’s Franchising Code of Conduct seemingly forgotten, the Australian Competition and Consumer Commission is calling for the introduction of financial penalties for rogue franchisors.

One of the recommendations taken up in 2010 was a commitment to review the performance of the Code changes in 2013 but there has been no recent suggestion that would occur. To have financial penalties to be introduced to the Code they would most likely come via the passing of legislation reform through the Federal Parliament although Minister Nick Sherry can bypass that process.

2013 would be a jolly good time for the ACCC to be allowed at least some of the meaningful recommendations that were ignored in 2010.

Those mostly ignored recommendations came about after a lengthy Inquiry by a committee chaired by the government’s own the Honourable Bernie Ripoll MP with those recommendations mirroring the recommendations from lengthy Inquiries held in Western Australia and South Australia in 2008. South Australia has since taken up those recommendations at a state level with a number of other states apparently waiting on the promised 2013 federal review..

In the 2010 Code changes the recommendation to introduce financial penalties was one of those ignored.

Speaking at a Franchising Council of Australia’s national conference Deputy Commissioner Dr Michael Schaper reaffirmed the ACCC’s commitment to improve regulation of the franchising sector noting complaints relating to failure to provide necessary documentation and misleading earnings claims.

At the moment they can get an injunction but there is no financial penalty and that is the main sort of thing that makes people stop and take notice.

It is frustrating for franchisees and unfair to the majority of franchise systems doing the right thing and there are rogues breaking the law and it is very hard for us to give them appropriate penalties.  Michael Schaper

The ACCC has warned that it has utilized its new powers to audit over 31 businesses and does plan to ‘cast its net out further’.

A PDF of Dr Schaper’s speech is attached below this article.

Speech - Schaper - Franchising Council of Australia - 7 October 2012.pdf34.19 KB
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About Ray Borradale

Ray Borradale's picture

Public Profile

Over forty years experience in Small Business and more than twenty-five years in franchising operations as a franchisee and employed by three franchisors, mostly in operations.

I have dedicated more than ten years and over 15,000 hours in the pursuit of quality franchising and exposing franchisor abuse of franchisees while advocating for the introduction of franchise relationship Law and the levelling of the dispute processes between bigger business and small business.


Area of Interest
Franchise Operations