Almost 200 Australian franchisors have scrambled after the deadline to upload their details to the Australian Government’s online Franchise Disclosure Register.
Approximately 1,300 franchisors had uploaded their details by the morning of the Register’s public launch date of November 15, with almost nearly 200 others joining in the following 17 days for a total of 1,498 franchisor listings as at December 2, 2022.
The Register was a recommendation of the 2018 Franchising Inquiry, and is intended to be a definitive list of entities which offer franchises in Australia. It originally proposed to include disclosure documents, but instead moved to a required list of information that franchisors must provide. The Register administrator may still require a franchisor’s disclosure document, key facts sheet and standard form agreement to be included in its listing, with a number of franchisors already voluntarily uploading their franchise agreements and disclosure documents.
A last-minute change to the Franchising Code of Conduct that included further references to the Register took effect from 11 November, just three days before the deadline for franchisors to finalise their Register listings.
The changes to the Code, outlined in the Competition and Consumer (Industry Codes-Franchising) amendment (additional information) Regulations 2022 go to https://www.legislation.gov.au/Details/F2022L01445, were passed by the government on November 10 and took effect the following day. An updated version of the Franchising Code of Conduct is now available at https://www.legislation.gov.au/Details/F2022C01111/Download
The Register requires franchisors to provide their name, trading name, ABN, office address, phone and email contacts, and ANZSIC division and subdivision codes for the industry in which the business operates, as well as other information which previously was voluntary, but following the latest Code changes, will now be mandatory. Franchisors who registered before the latest Code changes may need to update their profile to answer questions that were previously voluntary.
- To see the latest version of the Franchising Code of Conduct, go to https://www.legislation.gov.au/Details/F2022C01111/Download
- To see the government’s Explanatory Memorandum regarding the Code changes, go to https://treasury.gov.au/sites/default/files/2021-09/c2021-210402_explanatorystatement.pdf
- To see the Franchising Code amendment bill, go to https://www.legislation.gov.au/Details/F2022L01445
- To see the Franchise Disclosure Register website, visit www.franchisedisclosure.gov.au
Register does not clarify brands versus franchisors
The Franchise Disclosure Register has 1,498 franchisors listed as at December 2, 2022, however this figure does not provide a clear indication of the number of franchise brands operating in Australia as multiple franchisors may operate under the same brand as master franchisees.
For example, as at December 2 there are 204 listings on the Register relating to the search term “Jims” potentially all offering franchises relating to the Jim’s Group (https://jims.net/services/) of 52 franchise brands via a network of divisional and regional master franchisees, each of which would be required to list on the Disclosure Register.
The number of brands operating in Australia has been estimated over recent years to be somewhere between 1,000 and 1,300, with studies by Griffith University showing a slight decline of brands from 1,200 in 2012 to 1,160 in 2016.
However the exact number of franchise brands operating in Australia is not revealed by the Franchise Disclosure Register’s current search functions, and will potentially require a manual analysis of individual listings unless additional functionality is built into the Register.
Penalties for unfair contract terms to commence next year
Companies that have entered into unfair contracts with small businesses have until October 28 next year to rewrite the agreements or face new and significantly higher penalties, according to media reports.
The Treasury Laws Amendment (More Competion, Better Prices Bill 2022 (https://parlwork.aph.gov.au/Bills/r6923) passed both Houses of Parliament on October 27, 2022. The bill introduces penalties and other changes to unfair contract terms and significantly increases maximum penalties for breaches of the Competition and Consumer Act. Currently, courts can declare specific contract terms unfair and void but cannot prohibit them or impose penalties on businesses that include them in standard form contracts.
Maximum penalties for companies breaching competition law will increase to the greater of $50 million or three times the value derived from the relevant breach, or 30% of the company’s turnover during the period it engaged in the conduct.
More small businesses will also be affected by the changes which will apply to businesses with fewer than 100 employees or an annual turnover of less than $10 million. Previously, small businesses had to have fewer than 20 employees. To find out more go to https://www.accc.gov.au/media-release/accc-welcomes-new-penalties-and-expansion-of-the-unfair-contract-terms-laws and https://www.afr.com/policy/economy/rewrite-unfair-contracts-or-face-penalties-businesses-warned-20221101-p5bun1
Huge trainee dropout rate amid claims of suppressed wages
Documents obtained under Freedom of Information (FOI) indicate that 47% of new staff signed-up to government-funded training courses at national burger chain Grill’d failed to complete their training, according to a media report.
New Grill’d staff are required to sign up to the brand’s “Hamburger University” regardless of their interest in hospitality qualifications or what other studies they may be pursuing. The vocational qualification was funded under the Coalition’s Boosting Apprenticeship Commencements program (BAC), allowing Grill’d to pay trainees less per hour than non-trainees and receive up to $28,000 per year, per trainee.
Recently released documents clearly state that $16.6 million of subsidies were paid to Grill’d for 2,799 staff who signed up for the Hamburger University program between October 2020 and June 2022, of which 900 are still in training, 1,299 dropped out, and just 600 have completed.
Meanwhile, representatives of the Retail and Fast Food Workers Union (RAFFWU) claim McDonald’s has also benefited from tax-payer funding for what could be considered basic on-the-job training which also allowed them to supress wages, according to a media report.
It is not mandatory for McDonald’s staff to undertake the training courses and the company has defended the $29.5 million it received under the funding initiative by clarifying that recipients met all BAC program requirements. Of $29.5 million recieved, $25 million was paid to nearly 200 McDonald’s franchisees to subsidise up to 50% of the wages of around 4,600 trainees, while $4.5m was received by McDonald’s Australia Holding, a subsidiary of the US company, for 840 staff members.
Of the nearly 5,500 McDonald’s employees who received a wage subsidy (5% of its total Australian workforce), 800 have completed their training, 2,800 are still being trained, and 1,550 (28%) have dropped out. Read here https://www.afr.com/policy/economy/mcdonald-s-lovin-30m-from-taxpayers-to-train-staff-20221018-p5bqse and https://www.afr.com/politics/federal/grill-d-hamburger-university-has-near-50pc-dropout-rate-20221015-p5bq2n
Major service brand fined for alleged Code breach
The Jim’s Group, Australia’s largest service franchise chain, has paid penalties of $24,420 after the Australian Competition and Consumer Commission (ACCC) alleged that its Dog Wash division failed to correctly disclose details of ex-franchisees, according to an ACCC statement.
The ACCC alleged that Jim’s Dog Wash, one of 52 divisions of the Jim’s Group, understated the number of ex-franchisees in its disclosure document, and that it failed to provide the contact details of those ex-franchisees. The ACCC also alleged that Jim’s Dog Wash misrepresented the amount to a franchisee that their cooling-off rights under the Franchising Code of Conduct ended 14 days after making a deposit payment, rather than 14 days after signing a franchise agreement.
The payment of a penalty arising from an infringement notice is not an admission of contravening the Australian Consumer Law. Go to https://www.accc.gov.au/media-release/jim%E2%80%99s-group-pays-penalties-for-alleged-breach-of-franchising-code-and-the-australian-consumer-law
Praise for franchisee's unique job ad
A Queensland outlet of tyre and car servicing franchise Bridgestone has been praised for posting an amusing and inclusive advertisement seeking a tyre fitter to join their team, according to a media report.
The advertisement’s introduction is an entertaining invitation for applicants to earn money while losing weight and building muscle, but ultimately Bridgestone Noosa’s main concern is that applicants be positive, happy, and willing to learn, with age, gender, and race deemed unimportant. Go to https://www.news.com.au/finance/work/at-work/queensland-businesss-ripper-ad-applauded-for-inclusivity/news-story/40bb8767995fcdddb8b6e560a9388f11
Wage underpayment class action heads to court
A long running claim of wage underpayment of workers in pizza chain Dominos’ Australian stores will head to the Federal Court after lengthy delays, according to a media report.
The class action alleges that until 24 January 2018, Domino’s incorrectly told its franchisees to pay their workers under the wrong employment agreements, resulting in delivery drivers and in-store workers being paid less under a workplace agreement rather than the Fast Food Industry Award. The wage disparity was revealed by the Retail and Fast Food Workers Union, which is also leading a number of wage underpayment claims against fast food giant McDonald’s and its franchisees in Australia. To read more go to:
https://www.brisbanetimes.com.au/business/workplace/class-action-case-accuses-domino-s-of-underpaying-workers-20221024-p5bsdi.html, https://phifinneymcdonald.com/action/dominos-class-action-form/
Jason Gehrke | Director | Franchise Advisory Centre
Jason is the director of the Franchise Advisory Centre and has been involved in franchising for more than 30 years at franchisee, franchisor and advisor level. He advises both existing and potential franchisors and franchisees, and conducts franchise education programs throughout Australia.
He has been awarded for his franchise achievements, and publishes Franchise News & Events, Australia’s only fortnightly electronic news bulletin on franchising issues. In his spare time, Jason is a passionate collector of military antiques.
www.franchiseadvice.com.au
