Franchisees and franchisors risk financial penalties and infringement notices if they breach certain provisions of the Franchising Code.
Financial penalties and infringement notices are available under 24 penalty provisions of the Code, including failure to:
- act in good faith
- provide a disclosure document
- attend mediation
- provide reasonable written notice of proposed termination for breach.
Failure to comply with a penalty provision could result in the ACCC taking court action seeking a financial penalty, or issuing an infringement notice for the breach.
The ACCC’s Compliance and Enforcement Policy outlines the ACCC’s enforcement powers, functions and priorities and sets out the principles it adopts to achieve its enforcement and compliance objectives.
The ACCC gives enforcement priority to matters that demonstrate certain factors, including:
- conduct of significant public interest or concern
- conduct resulting in substantial detriment
- unconscionable conduct, particularly involving large national companies or traders
- conduct demonstrating a blatant disregard for the law
- where ACCC action is likely to have a worthwhile educative or deterrent effect.
The ACCC determines the appropriate enforcement tools to address concerns on a case by case basis, taking into consideration the alleged contravention, the business involved and the impact of the conduct.
Where necessary, the ACCC will take court action to enforce the Code. The ACCC can seek fines & penalties for breaches of certain provisions of the Code. Ultimately a court will determine the final penalty (if any) that is imposed.
The ACCC takes court action where, having regard to all the circumstances, it considers litigation is the most appropriate way to achieve its enforcement and compliance objectives.
The ACCC may issue an infringement notice where it has reasonable grounds to believe that a person has breached a penalty provision. Infringement notices are a timely and cost-effective way of resolving the ACCC's concerns and avoiding legal proceedings.
The ACCC will take into account a broad range of factors in considering whether to try resolving a matter through the issuing of an infringement notice. Circumstances where the ACCC is more likely to consider the use of an infringement notice, rather than taking the matter to court, include where:
- the conduct relates to isolated or non-systemic instances of non-compliance
- there have been lower levels of franchisee harm or detriment
- the facts are not in dispute.
The ACCC maintains a public register of paid infringements on its website.
To be valid, the ACCC must issue an infringement notice within 12 months of the alleged breach and the notice cannot relate to more than one alleged breach of a penalty provision. Where appropriate, the ACCC may issue multiple infringement notices. For example, where the ACCC believes there have been multiple breaches of penalty provisions.
There is no legal obligation on a recipient to pay an infringement notice. However, infringement notices are a way of resolving the ACCC’s concerns and avoiding legal proceedings. Non-payment of infringement notice penalties may expose you to the prospect of legal proceedings arising from the ACCC’s concerns that you have contravened the Code. If the ACCC is successful in any such proceedings the penalty imposed by the Court may be significantly higher than the infringement notice penalty.
To view paid infringement notices, visit the Infringement notices public register.