Franchise sector welcomes reform outcomes

Australia’s peak industry association for the franchising sector has welcomed the Franchising Code of Conduct reforms announced by the Federal Government.

“Given the dramatic impacts of COVID on small businesses across Australia, we are reassured by the Federal Government’s approach to introducing the changes in the context of today’s economic reality,” said Franchise Council of Australia CEO Mary Aldred.

“The past eighteen months has proved to be the most difficult economic environment Australian businesses have ever experienced. The FCA was wary of further business failures that may arise where there are rapid or overly punitive regulatory obligations.”

“We appreciate that the government appears to have taken into account the significant reforms already introduced by the FCA in response to the issues raised through the 2018 parliamentary inquiry into the franchise code of conduct and subsequent taskforce.”

“The FCA consulted extensively with franchisor and franchisee members as part of the industry consultation process. This included the FCA’s Policy Advisory Committee, a group comprising franchisors, franchisees and advisers, and the FCA’s Franchisee Advisory Committee. In addition, the FCA’s Legal Committee, representing the majority of specialist franchise lawyers in Australia, was asked to provide feedback on any potential excessive compliance costs or unintended consequences” said Ms Aldred.

“The Government consulted heavily with the FCA through development of the new regulations and is aware of not only the steps taken to introduce new measures to ensure compliance, but also the actively supportive role played by franchise networks and the FCA to deal with COVID-19 and assist franchises and small business through the challenges”.

“The FCA has worked hard to address the key themes that arose in the 2018 Parliamentary Inquiry: On the need to better engage franchisees, the FCA made significant changes. The FCA now has franchisees represented on its Board and has established a Franchisee Advisory Committee that meets regularly to consult and proactively raise issues”.

“The FCA revised member standards and guidelines and, during Covid-19, established a pro bono legal assistance program for franchisees needing legal advice. The FCA also prepared and published a Franchisee Guide for prospective franchisees, containing clear, detailed information on due diligence imperatives across business, finance, legal requirements”.

Mary Aldred