Retail leasing in New South Wales is set for a change in 2019 following the development of the Retail Industry Code of Practice – The Reporting of Sales and Occupancy Costs (the Code).
An outcome of the 2016 review of the Retail Leases Act 1994 (NSW), the Code marks a major power shift back to retailers, as shopping centre landlords will now have an obligation to provide benchmark information to their tenants where retailers provide sales data.
Australian Retailers Association (ARA) executive director Russell Zimmerman said the Code will ensure retailers will have the ability to access information on sales reporting and occupancy costs, improving transparency and accountability.
“This landmark achievement for retailers in NSW will provide vital information to tenants in shopping centres, allowing them to better-understand the real value of their leases,” Zimmerman said.
The ARA and the Pharmacy Guild of Australia have been instrumental in the establishment of this code which has been agreed to by the Shopping Centre Council of Australia.
However, the Franchise Council of Australia is not a signatory.
FCA CEO Mary Aldred told Inside Franchise Business the organisation remains supportive of moves to improve retail leasing but is seeking a bigger shift away from landlord power.
“It doesn’t go far enough, there is a lot more to be done to ease the appalling situations we see arise among small business owners,” she said. “Better end of term lease renewals would be a step in the right direction.”
FCA members have also raised concerns about shopping centre landlords having access to retailers’ sales figures.
“We will stay engaged but want a level playing field,” Aldred said.
The on-going parliamentary inquiry into franchising has revealed a systematic imbalance of power between landlords and retailers, which Serge Infanti, managing director of Foodco, the franchisor behind Muffin Break and Jamaica Blue, believes is damaging the industry.
“One of the biggest challenges we see is the power imbalance with landlords, who are often increasing rents while footfall is stagnant, and more and more food outlets are added to shopping centres. That’s why we work tirelessly to support our franchisees, so we can enjoy shared success,” Infanti said, speaking with Inside Franchise Business earlier this month.
There will be a six-month transitional period to 1 July 2019 for shopping centres to sign-up and implement the Code.
To view a copy of the Code, please click here.
