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The Businesslaw.com.au Team

By the BusinessLaw.com.au Team

The Federal Government’s most recent reviews of the Franchise Code have suggested a number of reforms aimed at protecting franchisees against unscrupulous franchisors.

In proposals arising from a chain of government reviews, it is proposed that the ACCC have the power to name and shame dodgy franchisors, and to conduct audits and impose fines for unconscionable conduct.

Despite a push by franchisee groups and others to expressly include an obligation of good faith in all franchise agreements, this is unlikely to appear any legislative reforms. The obligation is an one where the parties deal with each other in a reasonable, fair and cooperative manner.

The need for the various government reviews arising from the conduct of some franchisors, which has led to franchisees franchises being terminated, and franchisees being ripped off.

In addition to increased powers for the ACCC, the other suggested changes include:

1. Bolstering fines for unconscionable and misleading/deceptive conduct, by increasing fines for individuals to $220,000 and $1.1 Million for corporations;
2. Amending the Franchising Code to allow the ACCC to undertake audits of franchisors;
3. Public advisories, warning franchisees of ‘dodgy’ franchisors;
4. A requirement that Franchisors clarify to Franchisees, what happens at the end of the term of an agreement, including mediation to resolve disputes;

It is hoped that by the end of this month (January 2010) that the expert panel appointed by the government will report back with other suggestions for amendment to the Franchise Code and a definition for unconscionable conduct.

The changes appear to be coming some 9 years after the introduction of the last amendments to the Franchise Code in 2001.