Hundreds of Harvey Norman franchisees, many who have been fined this year over warranty claims, are set to be forced to operate under a new Australian Competition and Consumer Commission (ACCC) code.The new Franchising Code of Conduct will start as of January 1, 2015, and will apply to all franchise systems operating in Australia.
To help franchisors, current and prospective franchisees, and their professional advisers to understand the new code, the ACCC will be hosting a free interactive live webinar on 9 December 2014 at 12pm.
“With the new franchising code due to start in the new year, it is important that franchisors, franchisees and prospective franchisees understand their rights and responsibilities under the code,” commented ACCC deputy chair Dr Michael Schaper.
The ACCC’s enforcement priorities under the new code will include failure to act in good faith, failure to provide a disclosure document, refusal to attend mediation, and the unlawful termination of a franchise agreement.
There will be no moratorium period on enforcement action, however the ACCC will be focusing on “particularly egregious conduct”.
The ACCC stated some of the key changes of the new code will include:
– Introducing an obligation for franchisors and franchisees (including prospective franchisees) to act in good faith towards one another.
– Infringement notices of $8,500 for a company, and $1,700 for individuals and other entities.
– Court-ordered pecuniary penalties of up to $51,000 for breaches of the penalty provisions of the code.
– Requiring franchisors to provide prospective franchisees with a short information sheet which clearly outlines some of the risks and rewards of franchising.
– Requiring greater transparency around the use of marketing funds, including requiring the franchisor to keep the marketing and advertising fees in a separate account, and to provide meaningful information to franchisees about the fund’s income and expenditure.
– Requiring additional disclosure regarding the ability of the franchisor and a franchisee to sell goods and services online.
The new guidance on the code will be available here.
