Franchising changes in 2021 – What you need to know.

2020 has been a year in which we have seen the introduction of several new legislation together with amendments to existing ones. Towards the end of 2020, the Australian Government released an exposure draft where it proposes changes to the Franchising Code of Conduct. This comes in wake of the Fairness in Franchising Report and is the Government’s response to the Report.

What does this mean for Franchisees and Franchisors?

The proposed changes aim to increase the disclosure requirements from franchisors while also improving the rights of franchisees to “balance” the rights of the parties.

What are some of the key changes proposed?

  • Changes to dispute resolution with new conciliation and voluntary binding arbitration provisions making dispute resolution a more affordable option for the franchising sector, while also delegating the franchising dispute resolution advisor functions to the Australian Small Business and Family Enterprise Ombudsman (ASBFEO). 
  • Requirement to provide a ‘Key Fact Sheet’ that will highlight the most critical information contained in the disclosure document.
  • The disclosure of significant capital expenditure, rebate arrangements, arbitration of disputes, early termination of franchise agreements, rights relating to goodwill, earnings information, and further disclosure of lease information.
  • Increasing the cooling off period from seven (7) to fourteen (14) days.
  • Restriction on Franchisors requiring franchisees to pay legal costs of the franchisor preparing the franchise agreement and ancillary documents.
  • Doubling the penalties for breach of the Code from 300 penalty units to 600 penalty units, which would make it over $100,000.
  • Ability for franchisees to negotiate an early termination.
  • Restraint of trade clause to not have effect unless franchisee is in “serious breach” of the agreement.

Most of these proposed changes are set to come into effect from 1 July 2021, while the civil penalty provisions are expected to come into effect once the amendments to the Competition and Consumer Act 2010 (Cth) passes parliament.

Franchise operators will therefore need to examine their contracts and practices to ensure they are prepared for the upcoming changes.

Written by Oguzhan Sheriff
Director at RSG Lawyers and Associates.

Footnotes available on request.

Why is the Federal Circuit Court Overburdened by Migration Applications?

Immigration law is in a state of flux. This characteristic is typical to the immigration law system of many countries as the movement of people through borders is inevitably linked to politics, economy, trade and globalisation. However, in Australia, immigration has been continuously used as political hyperbole which has seemingly lead a movement towards uncompromising immigration policies. 

In my experience, Australia’s immigration system is focussed on preventing people from coming to Australia. I know that such a statement may seem like a fallacy as Australia is well promoted to be a “migrant nation”, however in the background the policies that the Department of Home Affairs implements unnecessarily makes it difficult for migrants that should otherwise be eligible to remain in the Country. 

The consequences of such immigration policies is that temporary visa holders appeal decisions made by the Department of Home Affairs all the way to the the Federal Circuit Court (FCC). In my experience, a number of such applications can take up to 2 years, or even more, for a final hearing at the FCC. 

In 2018, the principal registrar Stewart Fenwick told the committee that “migration appeals has blown out to 7607 pending and it is continuing to fall behind”. The FCC’s own Annual Report, released on October 2020, reveals stark concerns that the “FCC is simply unable to cope with its increasing workload, putting vulnerable children, Australian families and Judges at significant risk”. The FCC’s pending migration law caseload spiked by 58 percent, up from 7,674 applications in 2017–18 to 12,158 applications in 2019-20. If current filing rates continue, the Report concludes that without further resources the “pending migration caseload will overtake the pending family law caseload in less than two years”.

A number of such FCC applications do not necessarily have a proper basis however desperate, unrepresented migrants in Australia may have tendency to use the appeal process as a mechanism to prolong their bridging visa which is resulting in the FCC facing an astronomical backlog. While I am against applications lodged without basis, from a view of equity, I do not entirely blame the migrants that have made such baseless claims in the courts. In my view it is a broken immigration system that continues to employ stricter and stricter approaches in dealing with migrants that has a part to play in the FCC overburden. 

To deal with this issue would not mean to get through FCC applications quicker, to increase FCC application fees, which has been recently proposed, or to increase judicial appointments to the FCC. It requires an overall ease in immigration policies to allow for softer rules especially to those that have obtained qualifications in Australia and or those that have been sponsored by an Australian business. By softening such rules, it will result in removing such baseless FCC applications that have been lodged by tired and frustrated migrants. 

By Farhan Rehman.
Director at RSG Lawyers and Associates. 

Footnotes available upon request.