LEGAL | Staff Reporter, Australia

Senate launches inquiry on franchising misconduct

Following recent controversies in the franchise sector, the Senate has started an inquiry into the operation and effectiveness of the country’s Franchising Code of Conduct.

The inquiry, which officially launched on March 22, comes after the emergence of various franchising-related allegations against the Retail Food Group, the 7-Eleven System and ANZ Bank. 

Asked by QSR Media about the scope of the inquiry, Senator John Williams confirms that they will be taking a “whole industry approach” and will gather evidence from both franchisees and franchisors in order to acquire "good news, bad news, and in-between news."

“We're scrutinising the whole industry misconduct in the $170 billion franchise industry,” he said.

The inquiry is specifically expected to assess how effective the Franchising Code of Conduct is in terms of providing critical information such as likely financial performance of a franchise, contractual rights and obligations of all parties involved, leasing arrangements, and expected running costs.

Senator Williams also notes that he is “well aware” that thousands of franchise systems “are working very well” at the moment. He admits, however, that some franchises fail to work sustainably, with problems ranging from poor fiscal management and franchisees going broke.

The inquiry, which will consist of all the members of the Parliamentary Joint Committee, are also expected to collect information on the Conduct’s effectiveness in dispute resolution, the impact of the Australian Consumer Law unfair contract provisions on new, renewed and terminated franchise agreements entered into since November 12, 2016; and the enforcement of breaches of the Franchising Code of Conduct and other applicable laws.

“Anyone can make a submission [about a franchising dispute],” Senator Williams adds.

(Click here to contribute information to the committee.)

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