Fines to be introduced for breaches of industry codes

The Abbott Government has moved to give the Australian Competition and Consumer Commission (ACCC) more powers to allow it to apply fines to businesses which breach prescribed industry codes.

This is the first step in the start of a new era for franchising regulation and is part of a package of reforms that will improve, simplify and modernise the regulatory regime for the sector.

The Competition and Consumer Amendment (Industry Code Penalties) Bill 2014 allows for civil penalty provisions in a new Franchising Code of Conduct which will be introduced later this year.

A breach of a civil penalty provision will expose a franchisor or franchisee to an infringement notice of $8,500 issued by the ACCC or a pecuniary penalty of up to $51,000 imposed by the Court.

This reform will give the ACCC greater flexibility in how it enforces the Franchising Code to encourage increased compliance and reduce disputes in the sector.

The new code will aim to strike the right balance between the needs of franchisors and franchisees and the unique nature of the relationship between them.

The Government is committed to:
• ensuring franchisees and franchisors act in good faith in their dealings with each other;
• introducing penalties for a breach of certain provisions of the Franchising Code along with enhanced audit powers for the ACCC;
• improving the transparency of marketing funds; and
• improving disclosure including short form, easy to understand information for prospective franchisees.