The Future of Franchising

Retail & Consumer Products

March 15, 2019

Franchising

The future governance and oversight of the $170 billion franchise industry has become clearer this week following the release of the final report of the Parliamentary Inquiry into the Franchising Code of Conduct.

Triggered by widespread reporting of alleged underpayment of franchise workers and franchisee concerns about contractual arrangements with franchisors, the Joint Committee on Financial Services conducted public hearings across the country, hearing from franchisors, franchisees, industry experts and industry associations.

The Fairness in Franchising report has delivered more than 70 recommendations – many of which will fundamentally change the franchisor/franchisee relationship.

The Committee has proposed substantial changes to the Franchising Code of Conduct and to the responsibilities and powers of the Australian Competition and Consumer Commission.

Key recommendations include:

  • A range of measures to improve disclosure and transparency, including amending the Franchising Code of Conduct to require guidance on employment matters, especially Awards, minimum wages, and overseas workforce issues to be developed by the Fair Work Ombudsman.
  • Additional resources for the Australian Competition and Consumer Commission to enable it to appropriately investigate all complaints or whistleblower reports about illegal unfair contract terms.
  • Greater powers for the Australian Competition and Consumer Commission to intervene and prevent the marketing and sales of franchises where a franchisor shows a track record of churning and/or burning.
  • Alignment between aspects of various industry codes, including the Franchising Code, the Oil Code and the Food and Grocery Code of Conduct.

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