FCA and ACCC disagree over next step for improved compliance

The Australian Competition and Consumer Commission and the Franchise Council of Australia appear to be at odds over the best way to counter non-compliance in franchising.

While the ACCC has called for more severe penalties, a stronger Franchising Code of Conduct and better disclosure requirements to help protect franchisees, the Franchise Council of Australia has challenged the need for further regulatory reform.

ACCC deputy chair Mick Keogh called for these changes at the National Franchise Convention Legal Symposium in Melbourne.

“We want to see the Franchising Code strengthened, and supported by strong penalty provisions, to ensure franchise systems operate well for all parties involved to encourage compliance with franchise agreements and to keep competition on an even keel,” Keogh said.

In response, FCA CEO Mary Aldred said there appeared to be gaps between the expectations of the public and franchisees, and the actions of regulators and agencies.

“In many cases, issues involving actual breaches are not due to lack of franchising regulation but rather lack of ensuring business compliance and enforcement of existing laws.”

“Where issues of non-compliance are related to franchising, if proven, the allegations would breach existing areas of the code of conduct or ACCC regulations. Introducing a new level of regulation won’t help this.”

She also disagreed that a franchise register would cause franchisees to believe it implied ‘accreditation’.

“The FCA has proposed a register of all franchises to increase transparency but it does not provide an excuse for intending franchisees to ignore the need for due diligence.”

“A shared obligation underpins the Franchising Code – responsible franchisor behavior and franchisee due diligence, which means obtaining detailed legal and business advice.

“Any business, franchised or non-franchised, not running a compliant business should be held to account. That’s why the FCA has called for more transparency and accountability” said Aldred.