ACCC reminds franchisors of 31 October deadline

The Australian Competition and Consumer Commission has reminded franchisors that the old Franchising Code was repealed and replaced with a new Franchising Code of Conduct On January 1, 2015 and that they need to update their disclosure documents.

“The new Code introduced a number of new requirements including that franchisors provide additional information, disclosure and greater transparency to prospective and established franchisees,” the ACCC said.

“The new Code provided franchisors with a transitional period in which to review and update their disclosure documents. That transitional period ends on 31 October 2015, so we are reminding franchisors who haven’t yet updated their disclosure document that they must do so now.”

Furthermore, if a franchisor requires franchisees to pay money to a marketing fund, they must also prepare a marketing fund statement and have it audited by 31 October each year.

As part of its compliance and enforcement strategy, the ACCC uses its powers to quickly determine whether franchisors are complying with the Franchising Code.

Under the Competition and Consumer Act 2010, the ACCC can require a corporation to provide any information or documents it is required to keep, to generate or to publish under an applicable industry code. The corporation has 21 days to comply.

The ACCC will soon be conducting more checks across states and territories that will focus primarily on disclosure documents and marketing fund statements.

In October, Franchise Council of Australia chairman Michael Paul said that franchising provides the critical structure that cradles and supports Australia’s all-important small business community, generates an estimated $144 billion in turnover each year and is the backbone of Australia’s small business community.

“Our sector employs an estimated 460,000-plus people through an estimated 79,000 independently-owned and operated franchised outlets across approximately 1180 business franchise systems in Australia,” he said.

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