Govt seeks comment on franchise reforms

The federal government wants to arm the consumer watchdog with new powers to deal with unethical behaviour in the franchising industry.

Small Business Minister Bruce Billson on Wednesday released draft changes to the Franchising Code of Conduct and competition law for public comment.

There are 73,000 franchises and 1180 franchisors in Australia, with an estimated annual turnover of $131 billion.

In 2013, the Australian Competition and Consumer Commission received almost 600 complaints relating to franchising.

A review of the code in 2013 by Alan Wein, which reported to government in April last year, recommended 18 changes to improve its performance and cut red tape.

The draft code introduces a general duty on franchisors and franchisees to act in good faith during their dealings with each other and gives the ACCC the power to seek penalties of up to $51,000 from a court or issue an infringement notice of up to $8500 without having to seek a court order.

It will also improve disclosure and transparency of marketing funds and online sales arrangements and simplify the information given to prospective franchisees.

The changes are expected to take effect from January 1, 2015.