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More Pain for Franchisors

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On 1 January 2015 the new Franchising Code of Conduct (“the Code”) came into effect and introduced for the first time penalties for breaches of the Code. The Code allows the Australian Competition and Consumer Commission (“the ACCC”) to either:

•             issue infringement notices to corporations of up to 50 penalty units (currently $8,500); or

•             seek court ordered penalties for corporations of up to 300 penalty units (currently $51,000).

A penalty unit is currently the equivalent of approximately $170.00.  A bill is currently before Parliament which proposes to increase a penalty unit from $170 to $180.  It is also proposed in the the bill that the penalty unit be indexed every three years to the Consumer Price Index. If the bill is passed, the change will come into effect on 31 July 2015 and will mean the Franchisors who do not comply with the Code may have to face infringement notices of up to $9,000 and court ordered penalties of up to $54,000.

For more information, please contact our Franchise Law team by email franchise@mst.com.au or by telephone +613 8540 0200.