6 Takeaways From the National Franchise Convention 2016

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Table of Contents

• 1. Franchising is Fabulous
• 2. The ACCC is Watching
• 3. The 7 Eleven Scandal Should Serve as a Warning To All Franchisors
• 4. You Should Review Every Item of Your Franchisor’s Disclosure Statement Annually
• 5. Misleading and Deceptive Conduct and Misrepresentation Remains an Issue
• 6. The Unfair Contract Laws Are Set To Be a Game Changer

The annual National Franchise Convention is a meeting place for thought leadership on everything franchise related in Australia. Among the hot topics were the upcoming introductions to the Unfair Contract Terms, current employment law issues within the franchising sphere and technology issues facing the franchising community. We’ve set out below six key takeaways from the National Franchise Convention 2016 held in Canberra.

1. Franchising is Fabulous

The sheer size of the event, the number of attendees and various franchisors represented is a testament to the success of franchising in Australia. With more franchises per capita than anywhere else in the world, and a much higher success rate than stand-alone startup businesses, the growth of the franchise sector in Australia shows no signs of slowing.

2. The ACCC is Watching

The Australian Competition and Consumer Commission (ACCC) is the national regulator of the franchising community. Along with other duties, they are tasked with enforcing compliance with the Australian Consumer Law of which the Franchising Code forms a part. With wide-ranging investigatory and enforcement powers, the ACCC will focus on the new Unfair Contract Laws as a priority area for the year to come. Given the increasing number of franchisee complaints to the ACCC and resulting investigations (724 in 2015, up from 530 the year before), the consumer watchdog has demonstrated its willingness to use its powers to ensure compliance.

3. The 7 Eleven Scandal Should Serve as a Warning To All Franchisors

There can be no doubt the media coverage of the 7 Eleven wage scandal was not ideal for the franchise brand. What’s more, it left vulnerable employees underpaid. The ACCC is currently considering recommendations relating to the relationship between employment law and franchising law. The lesson was clear, franchisors and franchisees alike cannot ignore their employment law obligations.

4. You Should Review Every Item of Your Franchisor’s Disclosure Statement Annually

You need to consider a number of practical issues in undertaking the annual review of a disclosure document. For example, have award wages increased? If so, you’ll need to up the staffing costs in item 14. Have you updated your trade mark registrations? You will then need to update the intellectual property section of the document. Too many franchisors are leaving their updates to the last minute.

5. Misleading and Deceptive Conduct and Misrepresentation Remains an Issue

Misleading and deceptive conduct remains a hot topic in franchising, and is often the source of litigation and/or canvassed within the confines of the prescriptive dispute resolution procedure. Franchisors can no longer rely on an entire agreement or no warranties clause to exclude being bound by their ‘sales pitch’. That means statements as to profitability, customer base, success etc. are coming back to haunt them.

6. The Unfair Contract Laws Are Set To Be a Game Changer

The government is scheduled to introduce the unfair contract law changes in just over four weeks. These amendments to the Australian Consumer Law will change the way franchisors do business.

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Have any further questions about the National Franchise Convention 2016? Unsure how the new unfair contract changes will affect your business? Get in touch with our franchise lawyers on 1300 544 755.