Pop-up shop rules change, FCA supports amendments

The rules allowing pop-up shops to operate in shopping malls have been amended, a move likely to be popular with the franchise sector.

Franchise Council of Australia executive chairman, Bruce Billson, said a properly implemented and administered code has the potential to address a “significant pain point” for franchisees caused by pop-up shops operating without all of the costs and obligations of a longer-term tenant.

The Australian Competition and Consumer Commission’s decision to renew the voluntary code comes after several months of tension between industry bodies over the administration of the voluntary scheme after concern emerged that temporary retailers were introducing unfair competition into many shopping centres by being placed in close proximity to permanent stores.

Under the amended code the Australian Retailers Association (ARA), alongside the Franchise Council of Australia (FCA), the Pharmacy Guild of Australia (PGA) and the National Online Retailers Association will join the National Retailers Association and the Shopping Centre Council of Australia  on the committee administering the scheme.

“The Franchise Council of Australia welcomes the ACCC’s re-authorisation of an amended Casual Mall Licensing Code of Practice for the next three years,” said Billson.

“Retail tenancies issues and shopping centre conduct are the source of significant franchise community concerns and have a material impact on franchise business viability and success,” he said.

“Longer term tenants will now be informed about the centre’s casual mall licensing policy and where ‘pop up shops’ might be approved before signing a lease; will have their shopfront sight-lines respected; will not face the unreasonable introduction of a new external competitor as a ‘pop up’ licensee; and can expect a proportionate reduction in centre-wide outgoings when casual mall licences are granted.  Dispute resolution processes have also been improved.

“The franchise business tenants can expect greater certainty and transparency from shopping centre lessors in relation to casual mall licensing that voluntarily sign up to the revised code, and this is a positive step in the often fraught area of retail tenancy costs and conduct.

“As part of the CAC, the FCA will work to ensure a fair and balanced approach to casual mall leasing for retail tenants, a substantial number of which are franchised outlets.”

ACCC deputy chair Dr Michael Schaper said “The Code is likely to deliver certainty and transparency for permanent retail tenants about how casual mall leasing will operate near them.

“In our draft determination, we noted concerns from some tenants that the Code hasn’t served all retailers well in practice. The ACCC strongly encouraged the Shopping Centre Council to increase retailer representation on the Code Administration Committee. The SSCA accepted this suggestion and has invited additional retailers to join the Committee.”

The list of nominated mediators within the code has also been abolished in favour of delegating dispute resolution to the relevant state or territory small business commissioner or the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell.

The expiry date on the code, or the time before it must be re-authorised by the ACCC, has also been shortened from five to three years.

The changes are in line with recommendations made by the ARA, FCA and PGA, all of which initially argued against the re-authorisation of the code unless their concerns about representation were addressed.