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Government releases updated Franchising Code of Conduct



The Abbott Government has released an updated Franchising Code of Conduct, which Small Business Minister Bruce Billson says will save the sector an estimated $8.6 million per year.

Franchising | News | Small Business

By Guillermo Troncoso

The Abbott Government has released an updated Franchising Code of Conduct, which Small Business Minister Bruce Billson says will save the sector an estimated $8.6 million per year.

The Government says the updated Code, which was created in collaboration with the franchising sector, aims to strengthen Code effectiveness and guard against state-based regulation.

“Australia is the franchise capital of the world and the sector is a great source of enterprise and innovation, and we want to ensure the system is as healthy as it can be,” said Mr Billson.

“The amendments get the balance right between maintaining a level of regulation to foster the effective operation of the sector while reducing the overall regulatory burden.”

The new Code features a new streamlined disclosure process, which would see unnecessary information requirements removed.

Other key new features include:

– the introduction of a statutory obligation on franchisors and franchisees to conduct business ‘in good faith’;

stronger franchising powers for the Australian Competition and Consumer Commission (ACCC);

– an ‘information statement’ that will provide potential franchisees with information prior to signing agreements.

Existing disclosure documents can be used by franchisors till 31 October 2015.

The updated Franchising Code of Conduct will come into effect on 1 January 2015.

The ACCC is currently putting together guidance material for franchisors and franchisees, which will be available shortly.

“Latest figures show the franchising sector has grown to an estimated 79,000 business units, employing over 460,000 Australians and sales turnover of $144 billion annually,” said Mr Billson. “Additionally, 86 per cent of franchise systems operating in Australia originated in Australia.”

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