Franchises were a real problem for the ACCC in 2017
Five of the seven enforcement actions taken by the regulator were for alleged breaches of the Franchising Code.
The Australian Competition and Consumer Commission (ACCC) has published its Small Business 2017 Snapshot, which shows a focus on the franchising sector. Along with issues in franchising, the regulator said its most common activities were concerned with alleged misleading conduct, consumer guarantee issues and wrongly accepted payments.
“Small Business in 2017 gives a good overview of the issues the sector is raising with us, and the concerns that are likely to guide our activities throughout this current year," ACCC Deputy Chair Dr Michael Schaper said.
“We worked hard in 2017 to protect small businesses to ensure they’re not being unfairly treated, with a number of important firsts. We secured $177,000 in penalties for misconduct towards small businesses, including the first court-ordered penalties for breaches of the Franchising Code.”
The regulator took seven enforcement actions during 2017, five of which were for alleged breaches of the Franchising Code. Several of these actions included high-profile franchises such as Domino's, which was the first company to pay penalties totalling $18,000 for alleged non-compliance with the Franchising Code. Other franchise companies were hit with much tougher penalties, such as Pastacup which had to pay up to $100,000 for breaches of the Franchising Code.
The Small Business 2017 Snapshot found that there are 2.2 million small businesses operating in Australia, of which 70,700 are franchise units.
While franchise businesses can be a popular option for those looking to start a small business, the sector was hit hard with continued controversies in 2017. The ACCC said there will be a "particular focus" on large or national franchisors and issues relating to the Franchising Code.
“The majority of small businesses that contact us are micro-sized with less than four staff. We want small businesses to have a level playing field and every chance to succeed, so it’s our job to ensure everyone plays by the rules,” Dr Schaper said.
“The Competition & Consumer Act provides a range of protections for small business, as well as some responsibilities. The ACCC is committed to working with Australia’s 2.2 million small firms to help make sure they know these.”