Member for Paterson, Bob Baldwin has supported the release of the Commonwealth Government’s improved Franchising Code of Conduct to ensure the Australian franchising system is as healthy and as fair it can be.

“The government is working to cut red tape for small businesses in the Paterson electorate, as well as strengthening the effectiveness of the Code and guarding against state-based regulation,“ said Mr Baldwin.

“The latest figures show the franchising sector has grown to an estimated 79,000 businesses, employing over 460,000 Australians with a sales turnover of $144 billion annually, so it is important that it is fair.”

This new Code will deliver an estimated $8.6 million per year of savings in administrative costs across the franchising sector.

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.

Some of the main features of the new Code are:

•  the introduction of a statutory obligation on franchisors and franchisees to act in good faith in their dealings with each other;

•  a streamlined disclosure process that removes unnecessary information requirements;

•  improved transparency in how marketing funds are used and administered;

•  more flexible and stronger enforcement options for the Australian Competition and Consumer Commission (ACCC), with the introduction of civil penalties for serious breaches of the new Code, the ability to issue an infringement notice where appropriate and expanded audit powers;

•  an information statement that will give prospective franchisees essential information about the nature of franchising before they make a commitment to sign an agreement; and

•  a reasonable and balanced restriction on the enforceability of restraint of trade clauses, that still recognises the legitimate interests of franchisors.

To facilitate a smooth transition to the new Code, franchisors will be able to use their existing disclosure documents until 31 October 2015.

This means franchisors that might be signing up new franchisees in December and have obligations that continue into the New Year, must still discharge those existing obligations post 1 January 2015, in accordance with the current Code.

The new Code will apply to conduct occurring after the 1 January 2015 start date.

Penalties will apply for conduct after 1 January 2015 that breaches the new Code.

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

For more information contact he Honourable Bob Baldwin MP on 0419 694620.