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Tackling the franchising code and the UCT

The consumer and competition regulator thinks that the penalties for breaching the believes that that the penalties for breaching the franchising code of conduct and the unfair contract terms should be stronger.

This comes just months after the Australian Competition and Consumer Commission (ACCC) agreed to follow the Organisation for Economic Co-operation and Development (OECD) and strengthen the competition law penalties to make more of a deterrent.

“It is in the interests of all involved in the sector to have a clear understanding of what is required by law, so that businesses focus on becoming more competitive and growing market share, rather than being tempted to take shortcuts that will ultimately damage the business, but also the reputation of the franchise sector as a whole.” ACCC Deputy Chair Mick Keogh said at the National Franchise Convention Legal Symposium in Melbourne last week.

Last month, David Marin-Guzman writes for the Australian Financial Review last month said that to date there has been $5.7 million because what has been described of ‘serious’ exploitation. this is just the quarter of the $20 million that they set aside for this purpose.

The ACCC said that at present there two legal proceedings before the federal court—Ultratune Australia and Geowash.

Unfair Contract Terms

The UCT was identified by the ACCC earlier this year as one of their key priorities.

Keogh told the symposium that the biggest challenge to tackling UCTs is that under the existing legislation they are not illegal.

“The worst that can happen under the law is that unfair terms are subject to legal challenge, the Court declares them to be unfair and effectively strikes them out of the contract. But a business does not face a penalty for including them in the first place,” he explained.

He emphasised that the competition regulator wants to see this change to protect small businesses and franchisees.

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