Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Australia releases exposure draft of revised Franchising Code, (Apr 9, 2014)

By Peter Reap, J.D., LL.M.

Australia has released for public consultation an exposure draft of a revised Franchising Code of Conduct and relevant provisions in the Competition and Consumer Act 2010 (“CCA”). Comments are sought on the technical aspects of the chan ...

By Peter Reap, J.D., LL.M.

Australia’s Franchising Code of Conduct is a mandatory code that is prescribed under the Competition and Consumer Act 2010. The purpose of the Franchising Code is to regulate the conduct of participants in franchising towards each other. Broadly, it achieves this by requiring franchisors to disclose specific facts to franchisees and to follow set procedures in their dealings with franchisees. The Australian Competition and Consumer Commission is responsible for the administration and enforcement of the Franchising Code.

The exposure draft legislation gives effect to the Government’s “Future of Franchising” statement on policy reforms announced on 2 April 2014. The revisions include:

Introducing a general duty on franchisors and franchisees to act in good faith during their dealings with each other.
Removing the “double disclosure” duties currently imposed on master and foreign franchisors.
Requiring franchisors to provide prospective franchisees with a short information sheet, which gives them an overview of the risks and rewards of franchising. This will include information on unforeseen capital expenditure, the importance of education and conducting due diligence, and the prospect of franchisor failure.
Ensuring that franchisors remind franchisees that they are entitled to a current disclosure document when the franchisor indicates it intends to renew the franchise agreement.
Enhancing protections for franchisees against significant capital expenditure imposed by a franchisor.
Preventing parties to a franchise agreement from attributing their costs in dispute resolution to the other party.
Ensuring that franchisors cannot require franchisees to conduct dispute resolution outside the State where the franchisee’s business is located, unless otherwise agreed at the time of the dispute.
Improving compliance and enforcement outcomes through a range of flexible tools for use by the regulator, the ACCC. The Government will introduce penalties of up to $51,000 for serious breaches of the Code. This will mean stronger consequences for breaching the Code and will further deter parties from breaching the Code. The ACCC will also be given powers to issue infringement notices.
Clarifying and streamlining the operation of the Code, including the removal of unnecessary provisions to reduce red tape and compliance burdens on business.

Given the extensive consultation that has already occurred, comments are sought only on the technical aspects of implementing the law. There is no intention for this process to reconsider the policy underpinning these reforms, the government noted. Stakeholders are invited to comment on the draft bill and regulations that implement the Government’s franchising policy reforms. Submissions close on April 30, 2014, and details on submitting comments can be found in the announcement.

News: FranchisingDistribution

Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Australia releases exposure draft of revised Franchising Code, (Apr 9, 2014)

By Peter Reap, J.D., LL.M.

The exposure draft legislation gives effect to the Government’s “Future of Franchising” statement on policy reforms announced on 2 April 2014. The revisions include:

Introducing a general duty on franchisors and franchisees to act in good faith during their dealings with each other.
Removing the “double disclosure” duties currently imposed on master and foreign franchisors.
Requiring franchisors to provide prospective franchisees with a short information sheet, which gives them an overview of the risks and rewards of franchising. This will include information on unforeseen capital expenditure, the importance of education and conducting due diligence, and the prospect of franchisor failure.
Ensuring that franchisors remind franchisees that they are entitled to a current disclosure document when the franchisor indicates it intends to renew the franchise agreement.
Enhancing protections for franchisees against significant capital expenditure imposed by a franchisor.
Preventing parties to a franchise agreement from attributing their costs in dispute resolution to the other party.
Ensuring that franchisors cannot require franchisees to conduct dispute resolution outside the State where the franchisee’s business is located, unless otherwise agreed at the time of the dispute.
Improving compliance and enforcement outcomes through a range of flexible tools for use by the regulator, the ACCC. The Government will introduce penalties of up to $51,000 for serious breaches of the Code. This will mean stronger consequences for breaching the Code and will further deter parties from breaching the Code. The ACCC will also be given powers to issue infringement notices.
Clarifying and streamlining the operation of the Code, including the removal of unnecessary provisions to reduce red tape and compliance burdens on business.

News: FranchisingDistribution