Alleged failure to update Franchise Register: Penalties for Cash Converters & Mobile Travel Agents

In recent enforcement action, the ACCC issued infringement notices to two franchisors, Cash Converters and Mobile Travel Agents, each resulting in a $16,500 penalty for failing to update their profiles on the Franchise Disclosure Register. This action highlights the ACCC’s commitment to ensuring compliance, transparency and fairness in the franchising sector.

Understanding the Franchise Disclosure Register

The Franchise Disclosure Register is an online platform managed by the Australian Government’s Treasury Department. Franchisors are required to create and maintain profiles on this Register in accordance with the Franchising Code of Conduct to assist prospective franchisees in making informed decisions. Failure to update these profiles annually, particularly after the end of the franchisor’s financial year, constitutes a breach of the Franchising Code of Conduct. The ACCC has the ability to issue infringement notices for such breaches, with penalties up to $19,800 for corporation.

Recent enforcement actions

The ACCC has emphasised, by way of recent infringement notices, that maintaining up to date information on the Register is crucial for addressing power imbalances in franchising, promoting transparency, and ensuring prospective franchisees can make informed decisions.

Infringement notices tend to be issued for less serious or inadvertent non-compliance issues, although, they still have significant penalties. The ACCC can also seek, through Court action, higher penalties but these need to be imposed by the Court.

Implications for Franchisors

These recent penalties serve as a reminder to franchisors of the importance of complying with the Franchising Code of Conduct, particularly the obligation to update the Franchise Disclosure Register annually.

While the Register is reasonably new, and some may consider a less important disclosure resource, non-compliance can lead to significant penalties and damage to a franchisor’s reputation.

Franchisors should ensure they are aware of their obligations under the Franchising Code of Conduct and take proactive steps to ensure accurate and up to date information is on the Register.

Key takeaways

The ACCC’s recent enforcement actions highlight the importance of compliance with the Franchising Code of Conduct, particularly regarding the timely updating of the Franchise Disclosure Register.

For guidance on complying with the Franchising Code of Conduct and maintaining an accurate Franchise Disclosure Register profile, speak to one our franchising experts.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.