Supporting Small and Family Franchising Businesses
21 August 2020
The Morrison Government is introducing stronger protections and greater transparency to the franchising sector in order to restore confidence and support a major part of the Australian economy.
Franchising supports an estimated 1,240 brands and contributes $170 billion to the economy annually, employing 580,000 Australians across 95,600 franchises.
The Government has today released its response to the Fairness in Franchising report, which identified significant weakness in parts of the franchising sector that have been detrimental to the many small business owners who run franchises.
Today, Senator the Hon Michaelia Cash, Minister for Employment, Skills, Small and Family Business, and the Hon Michael Sukkar MP, Minister for Housing and Assistant Treasurer, announced a plan to help ensure fairness and accountability for both franchisees and franchisors.
This plan will restore confidence in the franchising sector by introducing new measures to protect franchisees, improve the information available to franchisees, and lift franchisor standards of conduct.
These reforms will be achieved through a combination of regulatory and legislative changes, including:
- Doubling the penalties that apply for a breach of the Franchising Code.
- Strengthening dispute resolution through the introduction of conciliation and voluntary binding arbitration.
- Simplifying and improving disclosure and transparency provisions to assist franchisees understand potential obligations and risks.
- Introducing a public register of franchisors to increase transparency in the sector.
- Developing a franchising website to make it easier for both franchisors and franchisees to access information and support.
- Prohibiting franchisors unilaterally imposing significant capital expenditure on franchisees during the term of an agreement.
Minister Cash said the Government is committed to striking the right balance between franchisees and franchisors to ensure the continued development and success of the sector.
“The Government will strengthen the regulatory framework and restore confidence in the sector while carefully designing changes in consultation with the sector to ensure they are practical to implement,” Minister Cash said.
“We are working methodically to deliver significant reform to the franchising framework which will ensure that it is fair, effective and accountable in the interests of both franchisors and franchisees, while avoiding unnecessary red tape.”
Minister Sukkar said both the report and the feedback from the consultation process emphasised that there is a need for a stronger framework to lift franchisor standards of conduct.
“Franchising is an important part of our economy that has enabled thousands of Australians to build their own small business to support their families and create jobs in their local communities,” Minister Sukkar said.
“Our plan has been designed to get the balance right to ensure Australia’s franchisees can trade with confidence, setting up the sector for a bright future.”
The Government will work closely with franchisors and franchisees to ensure the reforms are designed and implemented successfully.
Media contact: Minister Cash's Office 02 6277 7610