International Law

Government responds to unconscionable conduct and franchising report

By admin

The Government has announced it will amend the Trade Practices Act to clarify the unconscionable conduct provisions of the Trade Practices Act.

The changes are in response to an expert panel report entitled Strengthening statutory unconscionable conduct and the Franchising Code of Conduct.

The report recommended that the Government should consider harmonising or unifying sections 51AB and 51AC of the Trade Practices Act and include interpretative principles, as an aid to interpretation of the provisions, to assist the courts in interpreting the provisions, stakeholders in understanding them and regulators in enforcing them.

Increased new penalties for contravention of the statutory unconscionable conduct provisions (up to $1.1 million for companies and $220,000 for individuals) are in the Australian Consumer Law Bill which is currently before Parliament.

The report also considered whether the Franchising Code of Conduct should be amended to deal with certain franchisor practices, including unilateral variations by franchisors, requirements for capital expenditure, consent to business sales and confidentiality requirements.

The report recommended that a short, simple, ?Plain English? document should be developed, to be provided to prospective franchisees before they are psychologically, financially and legally committed to entering a franchise agreement. This short document would be a ready reference to the nature of the franchise relationship.

The report also suggested the provisions of the TPA may provide remedies where appropriate, for example, where unilateral variations of franchise agreements by franchisors constitutes unconscionable conduct.

Full post as published by Australian Regulatory Compliance Review on March 07, 2010 (boomark / email).