Does your franchise measure up?

All businesses that sell goods by measurement or that manufacture, pack, import or sell prepackaged products, are required to comply with Australian trade measurement laws, the National Measurement Act 1960 and the National Trade Measurement Regulations 2009.

Franchisees need to ensure that their business practices comply with Australian trade measurement laws or they could face fines or court proceedings. If your business is caught short-measuring its customers, you could be fined up to $170,000 per offence as a company or up to $34,000 per offence as an individual.

Recent audits of businesses across Australia that sell product by weight ‘over the counter’ have identified issues in the franchise sector with the use of unapproved scales and not properly accounting for the weight of packaging. Almost a third of businesses audited were found to be non-compliant. The National Measurement Institute’s (NMI) trade measurement team is there to help you understand and comply with the law.

What is trade measurement?

Trade measurement laws exist to support the efficient operation of the market by providing confidence that business transactions are based on fair measure.

Any wholesale or retail sale which involves a measurement, such as weight, volume, length or number, is covered by these laws.

If you use a measuring instrument such as a scale to sell goods, you must make sure it is:

• an approved type, that is suitable for its intended purpose;

• tested and certified as accurate (verified) by a licensed technician;

• used in the correct manner (eg level and indicating zero before use);

• kept clean and in good working order; and

• continues to provide accurate measurement.

Similar regulations also apply to any point of sale (POS) system connected to the measuring instrument.

NMI recommends that all measuring instruments used for trade are checked regularly for accuracy by a technician licensed by NMI (servicing licensee). Trade measurement audits find that measuring instruments such as scales, when inaccurate, are more likely to be inaccurate in favour of the customer than otherwise.

So, having your instruments checked can help you avoid losing money by giving product away. You can get a list of servicing licensees by contacting NMI’s Licensing Team on 1300 686 664 (option 2) or tmlicensees@measurement.gov.au. All packaged goods must meet the legal requirements for correct measurement, including labelling regulations for measurement statements and packer identification.

When goods are sold over the counter by weight, customers should pay only for the product not the packaging material. For example, if you’re selling mixed confectionery by weight, then customers should only be charged for the sweets, not for the weight of the plastic container. Electronic checkout scales can be set to automatically deduct the weight of the packaging during the weighing process or staff can manually set the scale to deduct the weight of the packaging materials.

Penalties and enforcement

The National Measurement Institute (NMI) administers the trade measurement laws and has a national network of inspectors to help businesses understand and comply with their legal requirements.

NMI inspectors can visit a place of business ‘at any reasonable time of day’ in response to a complaint or enquiry, or as part of a compliance inspection program. Businesses are obliged to provide inspectors with all reasonable facilities and assistance. NMI inspectors can also make ‘trial purchases’ to anonymously check whether correct procedures are being followed in the normal course of business.

Trade measurement inspectors audited almost 10,000 businesses and issued just over 3,500 non-compliance notices during the 2013-14 financial year. The majority of these compliance issues were minor and were fixed by the businesses after receiving a non-compliance notice and advice from the inspector.

However, when continued non-compliance is detected after a notice has been previously issued or a breach detected in an initial audit is particularly severe, enforcement action of a more serious nature is taken. This includes infringement notices with associated fines. In 2013-14, NMI imposed 138 fines totalling more than $150,000 and referred six matters to the Commonwealth Director for Public Prosecutions to consider for further legal action.

As part of a targeted inspection program in the second half of 2014 NMI inspectors made ‘trial purchases’ at 661 businesses, many of which were franchise businesses, and issued non-compliance notices relating to the incorrect use of scales and/or not properly accounting for the weight of packaging at almost a third (203) of those premises.

As with businesses audits generally, in most cases inspectors were able to work with the business to ensure proper procedures were put in place and no further action was taken. However fines have been issued to 29 businesses (almost two thirds of which were franchise businesses) under this particular inspection program to date.

Making sure you comply with the law

The NMI website (www.measurement.gov.au) is a good start for more information on trade measurement laws and regulations, including:

• a Franchising and Trade Measurement factsheet; and

• publications such as a Guide to the Sale of Pre-packaged Goods and New Requirements for Point of Sale Systems.

www.measurement.gov.au/publications/trademeasurement.

Mal Bartlett is the National Manager, Trade Measurement Services working from the National Measurement Institute’s Geebung Office in Queensland.

Mal has been associated with Trade Measurement for in excess of 40 years, commencing with the Queensland Government in 1970 as a cadet weights and measures inspector progressing to Queensland Manager in 1997 and appointed as National Manager, Trade Measurement Services with NMI in February 2010.

Trade Measurement Services is the compliance and enforcement arm of the National Measurement Institute’s Legal Metrology Branch with a staffing level in excess of 100.

For specific advice about these matters, to order printed copies of publications and for all other trade measurement enquiries, please contact:

P: 1300 686 664
E: infotm@measurement.gov.au
W: www.measurement.gov.au