Federal Minister for Small Business Julie Collins has announced a comprehensive review of the Franchising Code of Conduct (the Code). The Code regulates Australian franchisees and franchisors.

The review will evaluate previous reforms and bring a number of examinations under one umbrella, including statutory reviews of the Franchise Disclosure Register and new car dealership protections in the Code.

The Franchising Code of Conduct Review will analyse:

• The general fitness-for-purpose nature of the Franchising Code is due to sunset on 1 April 2025.
• The role of the Australian Competition and Consumer Commission and the Australian Small Business and Family Enterprise Ombudsman in supporting enforcement and dispute resolution under the franchising regulatory framework.

Importantly for retail automotive, the role of the Franchising Code in regulating the automotive sector will be looked at, including:

• Whether Franchising Code protections available to automotive franchisees should be extended beyond new car dealerships (for example to truck, motorcycle and farm machinery dealerships). This is a key priority for MTA franchise members.

The review will also consider the effectiveness of 2020 and 2021 reforms which:

• Provided for multi-party dispute resolution and clarified that agency models are captured by the Franchising Code.
• Created new obligations relating to compensation in the event of early termination, and franchisees’ capacity to make a return on investment.
• Provided additional protections to apply at the end of a franchise term including notification requirements and processes for winding down.
• Restricted the franchisors’ capacity to require a franchisee to undertake significant capital expenditure.
• Clarified the operation of the Franchising Code obligation to act in good faith about new car dealerships.

The impact of 2022 reforms will additionally be examined which increased certain penalties available under the Franchising Code to: the greater of $10,000,000 or three times the benefit obtained; or 10 per cent of annual turnover.

Through our national body, the Motor Trades Association of Australia (MTAA), we will be making a submission on your behalf. It will have a particular emphasis on the introduction of extended franchising code of conduct protections for commercial vehicle, motorcycle, farm machinery and industrial machinery dealers.