Franchising is an important contributor to the Australian economy. The regulatory framework that underpins the relationship between franchisors and franchisees is critical to ensuring confidence in the sector. It should promote positive commercial relationships, fair trade and not unduly restrict competitive conduct.
Reviews provide an important opportunity to evaluate the effectiveness of regulatory frameworks. To meet the requirements of statutory and other review requirements in relation to franchising, a review process is to commence in the second half of 2023.
The review will have regard to the following:
- Noting that the Franchising Code is due to sunset on 1 April 2025, the general fitness for purpose of the Franchising Code.
- The role of the Australian Competition and Consumer Commission and the Australian Small Business and Family Enterprise Ombudsman in supporting enforcement and dispute resolution under the franchising regulatory framework.
- The role of the Franchising Code in regulating the automotive sector, including:
- Whether Franchising Code protections available to automotive franchisees should be extended beyond new car dealerships (for example to truck, motorcycle and farm machinery dealerships).
- The effectiveness of 2020 and 2021 reforms which:
- provided for multi‑party dispute resolution and clarified that agency models are captured by the Franchising Code
- created new obligations relating to compensation in the event of early termination, and franchisees’ capacity to make a return on investment
- provided additional protections to apply at the end of a franchise term including notification requirements and processes for winding down
- restricted the franchisors’ capacity to require a franchisee to undertake significant capital expenditure
- clarified the operation of the Franchising Code obligation to act in good faith in relation to new car dealerships.
- The impact of 2022 reforms which increased certain penalties available under the Franchising Code to: the greater of $10,000,000 or three times the benefit obtained; or 10 per cent of annual turnover.
- From 15 November 2023, which will mark when the Register has been publicly available for one year, provisions in the Franchising Code related to the Franchise Disclosure Register.
- The review process will be informed by consultation which allows all interested parties to make submissions.
- A report that includes appropriate findings and recommendations will be prepared.
- The report will be provided to the Minister for Small Business, the Hon Julie Collins MP, no later than the end of December 2023.
- Where required, the final report will be required to be assessed against the criteria for a post‑implementation review as set out in the Australian Government Guide to Policy Impact Analysis.