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Insights into ACCC activity since the introduction of the New Franchising Code of Conduct

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By Marian Ngo, Lawyer, MST Lawyers

The Australian Competition and Consumer Commission (ACCC) has released its’ ‘Small business in focus’ report for the period January to June 2015. This report is the first in the series covering the period of operation of the New Franchising Code of Conduct (“Code”), which took effect on 1 January 2015.

The report shows that whilst franchising-related complaints have remained steady (249 complaints between January and June 2015 compared to 239 complaints between July and December 2014), franchising-related enquiries have increased significantly in the same period, from 122 enquiries to 199 enquiries.

For the 2014/2015 financial year, misleading conduct and/or false representations represented the highest proportion of all franchising complaints at 34%, with franchising code disclosure issues coming second at 20% and unconscionable conduct coming third at 15%. Between January and June 2015, the ACCC audited 12 franchisors for compliance with the Code. This represents 16% of all franchisor audits the ACCC has carried out since the audit powers were introduced in 2011.

The ACCC is yet to publish any specific details of franchising related action taken in 2015. It states that its priorities for the remainder of 2015 include ensuring compliance with new or amended industry codes of conduct and unconscionable conduct, particularly when involving large national traders. These insights demonstrate that franchisors must be vigilant about ensuring their franchising documentation, particularly disclosure documents, are current and that supporting processes are compliant with the Code.

If you are seeking legal advice in relation to any Franchising matter, please contact our Franchise Law team by email franchise@mst.com.au or by telephone +613 8540 0200.