ACCC Cracks Down on Franchisors: Compliance Reminder
The Australian Competition and Consumer Commission (ACCC) has recently issued infringement notices to Cash Converters and Mobile Travel Agents for allegedly breaching the Franchising Code of Conduct. Both companies were penalized $16,500 each for failing to update their profiles on the Franchise Disclosure Register.
Key Takeaways
Franchise Disclosure Register: The register was established under the Franchising Code of Conduct in 2022 and requires franchisors to disclose essential information to prospective franchisees, promoting transparency and informed decision-making. See our previous article on the Franchise Disclosure Register for more information.
Annual Updates: Franchisors must update, or confirm their information, on the Franchise Disclosure Register annually, particularly after the end of the franchisor’s financial year.
Penalties for Non-Compliance: The ACCC can issue infringement notices with substantial penalties and it may seek higher penalties through court action.
Implications for Franchisors
Compliance is Crucial: Maintaining up-to-date information on the Franchise Disclosure Register is essential for addressing power imbalances in franchising and promoting transparency.
Risk of Penalties: Franchisors who fail to comply may face significant penalties, damage to their reputation, and potential legal action.
Best Practices
Regularly Review and Update: Ensure your franchise's information on the Franchise Disclosure Register is accurate and up-to-date.
Automated Reminders: Consider implementing automated reminders to stay on track with annual updates.
Seek Professional Advice: Consult with us to ensure that you are in compliance with the Franchising Code of Conduct. We have experience in advising franchisors and we can assist with navigating complexities.
Conclusion
The ACCC's recent actions serve as a reminder for franchisors to prioritize compliance with the Franchising Code of Conduct. By staying informed and proactive, franchisors can minimize risks and maintain a strong, compliant franchise operation.
If you have any questions or concerns about your obligations under the Franchising Code of Conduct or the Franchise Disclosure Register, please don't hesitate to reach out to Winston Lay and his team.