Franchising Code breach penalties – A step closer

On 4 September 2014, the Federal Parliament passed the Competition and Consumer Amendment (Industry Code Penalties) Bill 2014 (Bill).

The Bill will have a significant impact on the franchising sector, as it will allow regulations to be made to impose monetary penalties on franchisors associated with a breach of the Franchising Code of Conduct (Code). The Bill is consistent with the exposure draft of amendments to the Code that was released earlier this year.

The Bill will facilitate a change to the way that the Code is enforced by amending the provisions of the Competition and Consumer Act 2010 (Cth) (CCA) to enable the Australian Competition and Consumer Commission (ACCC) to either issue infringement notices or seek orders for civil pecuniary penalties for breaches of the Code. The explanatory memorandum to the Bill provides that changes to the Code are proposed to apply prospectively.