Financial penalities in sight for breaches of franchising code


Businesses that breach the Franchising Code of Conduct could face financial penalties now the Coalition Government has passed legislation in the Senate giving the Australian Competition and Consumer Commission more power.

The legislation, which had strong bipartisan support in both houses, provides the ACCC with the power to apply infringement notices to a franchisor or franchisee to the value of $8,500 or a pecuniary penalty of up to $51,000 imposed by the Court.

Code legislation

This legislation paves the way through Parliament for the Franchising Code of Conduct update expected to be implemented on 1 January, 2015.

The Minister for Small Business, Bruce Billson, has referred to the penalties as ‘reasonable and moderate’ and said civil pecuniary penalties will only apply to “provisions of the Franchising Code of Conduct that are fundamental to the purpose of the Code and where non-compliance is likely to cause significant detriment to the other party”.

Franchise Council of Australia chairman Michael Paul said “We support the introduction of penalties to deal with those businesses that seek to masquerade as franchises or ignore or commit flagrant breaches of the Code. Those organisations are not welcome as FCA members, and should feel the full force of the law.

“We welcome the ongoing commitment of the Government to enhancing the Australian franchising sector – a sector that can already boast world’s best practice thanks to its practical regulation and passionate business people,” Paul said.