LAWFUEL – Law Newswire – Holding Redlich report –
The Australian Competition and Consumer Commission (ACCC) has recently issued, The Franchisee Manual (Manual). The manual is described by the ACCC as “a comprehensive publication that will assist people thinking about buying a franchise and also existing
franchisees to understand and comply with the Franchising Code”.
Topics covered by the Manual include:
• what is franchising
• the application of the Franchising Code of Conduct
• advantages, disadvantages and responsibilities of being a franchisee
• steps that should be taken before choosing a franchise
• how to research and verify information about a franchise
• steps that should be taken to understand and evaluate a franchise agreement
• how to resolve a dispute
• your contract with another person for the carrying out of work by that person
• the person’s employees are engaged in carrying out the work; and
• frequently asked questions
The Manual is available at the ACCC website – www.accc.gov.au/content/index.phtml/itemId/795322
While The Franchisee Manual provides guidance only, franchisors should consider including the Manual in the information they provide to prospective franchisees.
Is the ACCC about to get tougher on franchisors?
The Manual follows hot on the heels of the ACCC’s announcement that it has secured enforceable undertakings, and the return of some
franchise fees from the former master franchisee of the Quizno’s restaurant chain. Quizno’s, which has now ceased trading, was accused by the ACCC of misleading and deceptive conduct in representations made to prospective franchisees.
Some media reports have speculated that the ACCC action marks the start of a campaign of action against franchisors engaging in misleading or deceptive conduct or unconscionable conduct, under the Trade Practices Act 1974. ACCC chief, Graeme Samuel, is reported to have said: “There is some time taken in the investigation of these matters, but in appropriate cases I think you’ll see us taking more matters to court to try to test those boundaries.”
If it is correct that the regulator is now taking a more aggressive approach, franchisors should consider taking immediate steps to review their systems and documentation to determine whether they will withstand scrutiny if the ACCC comes knocking.
