$10 million for Franchising Code breach? – what you need to know
2 mins reading time
Amendments made to the Competition and Consumer Act 2010 open the door for drastically increasing breaches of the Franchising Code (Code).
You made have heard something about this but while the changes enable greater fines to be imposed – the amount of the fines have not yet increased.
what has been enacted?
The Treasury Laws Amendment (2021 Measures No 6) Bill 2021 (Cth) was passed and new amendments to the Competition and Consumer Act 2010 have come into force.
Among the changes were amendments that empower the regulations relating to the Code to include significantly higher penalties for breaches of the Code.
For corporations, the amendments state that the Code may impose a maximum penalty to the greatest of the following:
- $10 million; or
- 3 times the value of the benefit obtained directly or indirectly from the contravention by the corporation or any other related corporations; or
- 10% of the annual turnover of the corporation and any related corporations in the 12 months prior to the month in which the breach occurred.
For individuals, the amendments state that the Code may prescribe a maximum penalty of $500,000.
Alternatively, the amendments state that if the Code does not choose to set the above maximum penalties for corporations and individuals, it can instead set a maximum penalty of 600 penalty units – currently $133,200.
no changes to Code fines yet
It is important to emphasise that the current fines under the Code have not yet been increased. The amendments have the effect of giving the option for updates or future versions of the Code to impose higher penalties (up to these new thresholds).
These amendments come in addition to the substantive changes to the Code made earlier this year. See here for our Insight about those changes.
For more information on these changes, or any other updates for franchisors, please do not hesitate to contact our Franchising team.
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$10 million for Franchising Code breach? – what you need to know
Amendments made to the Competition and Consumer Act 2010 open the door for drastically increasing breaches of the Franchising Code (Code).
You made have heard something about this but while the changes enable greater fines to be imposed – the amount of the fines have not yet increased.
what has been enacted?
The Treasury Laws Amendment (2021 Measures No 6) Bill 2021 (Cth) was passed and new amendments to the Competition and Consumer Act 2010 have come into force.
Among the changes were amendments that empower the regulations relating to the Code to include significantly higher penalties for breaches of the Code.
For corporations, the amendments state that the Code may impose a maximum penalty to the greatest of the following:
- $10 million; or
- 3 times the value of the benefit obtained directly or indirectly from the contravention by the corporation or any other related corporations; or
- 10% of the annual turnover of the corporation and any related corporations in the 12 months prior to the month in which the breach occurred.
For individuals, the amendments state that the Code may prescribe a maximum penalty of $500,000.
Alternatively, the amendments state that if the Code does not choose to set the above maximum penalties for corporations and individuals, it can instead set a maximum penalty of 600 penalty units – currently $133,200.
no changes to Code fines yet
It is important to emphasise that the current fines under the Code have not yet been increased. The amendments have the effect of giving the option for updates or future versions of the Code to impose higher penalties (up to these new thresholds).
These amendments come in addition to the substantive changes to the Code made earlier this year. See here for our Insight about those changes.
For more information on these changes, or any other updates for franchisors, please do not hesitate to contact our Franchising team.