Franchisees set to get more power and info under Morrison government’s changes to code

The nation’s franchisees will be given more information and more power to stand up to their parent businesses under a sweeping reform of the sector’s code of conduct.

Employment Minister Stuart Robert. Picture: Gary Ramage

Franchisees will be given more information and more power to stand up to their parent businesses under a sweeping reform of the sector’s code of conduct.

Employment Minister Stuart Robert on Tuesday will release a wholesale reform of the Franchise Code of Conduct which will force franchisors to provide more information to potential dealers and explicitly lay out arbitration processes to solve disputes.

More than three years after a parliamentary inquiry called on the government to make franchising more fair and transparent, Mr Robert on Monday said the changes would better balance the rights of franchisees and give small business owners more access to justice.

The government’s changes to the code will introduce conciliation and arbitration measures into the system and give the Small Business Ombudsman extra powers to involve itself in franchising disputes. Reforms will also include providing a mandatory facts sheet to potential franchisees and making it easier for small businesspeople to break off franchising agreements.

Franchise Council of Australia chief executive Mary Aldred said the government’s proposals would bring a better balance to the franchisor-franchisee relationship post-pandemic.

“These changes will help clarify clear expectations and information for potential franchisees and let them know where to go for assistance,” she said on Monday.

“Relationships are key in franchising and this reform will hopefully bring a better balance to franchisees and franchisors’ rights and responsibilities.”

The government has previously announced it will increase penalties significantly for any franchisor or franchisee which breaks the code of conduct.

More than $4.3 million was unveiled in the budget last month for a new Franchise Disclosure Registry to help prospective franchisees looking to invest in a new business. The government is also set to release a discussion paper on further reforms for franchising in the car dealership sector in the coming months.