In yet another step to consider reforming Australia's growing franchising industry, the Federal Government has announced an inquiry to examine the operation of the Franchising Code of Conduct (Code) and to look at ways that it may be improved.

The inquiry will be conducted by the Parliamentary Joint Committee of Corporations and Financial Services (Committee). This is the third inquiry to be launched in less than 12 months, with the Western Australian and South Australian Government inquiries recommending significant changes to the Code.

The most recent changes to the Code came into effect on 1 March 2008 but the adequacy of those changes has been questioned by groups promoting the interests of franchisees.

Terms of Reference

The Committee's terms of reference are to inquire into and report on the operation of the Code as well as to identify improvements to the Code, with a particular focus on:

1. the nature of the franchising industry, including the rights of both franchisors and franchisees;
2. whether an obligation for franchisors, franchisees and prospective franchisees to act in good faith should be explicitly incorporated into the Code.
3. the interaction between the Code and Part IVA and Part V Division 1 of the Trade Practices Act especially in relation to the prohibition against unconscionable conduct;
4. the operation of the dispute resolution provisions under the Code; and
5. any other related matters.

The Committee, chaired by Queensland Labor MP Bernie Ripoll, is expected to deliver its report by 1 December 2008.

Submissions

The Committee welcomes submissions from the public by 12 September 2008 on any of the issues raised.

The submissions should be sent to: corporations.joint@aph.gov.au.

If you would like any assistance in preparing a submission to the Committee or any advice on the inquiries undertaken by the Western Australian and South Australian Governments, please contact us.

We will keep you informed of further developments in this area.