The Coalition Government has passed legislation in the Senate that gives the Australian Competition and Consumer Commission (ACCC) the power to apply pecuniary penalties to businesses which breach industry codes.

This legislation paves the way through Parliament for the Franchising Code of Conduct (the Code) update expected to be implemented on January 1, 2015.

The legislation, which had strong bipartisan support in both houses, provides the ACCC with the power to apply infringement notices to a franchisor or franchisee to the value of $8,500, or a pecuniary penalty of up to $51,000 imposed by the Court.

Minister for Small Business, Bruce Billson, who referred to the penalties as “reasonable and moderate”, said civil pecuniary penalties (CPP) will only apply to “provisions of the Franchising Code of Conduct that are fundamental to the purpose of the Code and where non-compliance is likely to cause significant detriment to the other party”.

Franchise Council of Australia Chairman, Michael Paul, said the submission and consultation process to this point had been a decidedly positive one, and the FCA and its members would now wait to see the Code update introduced to Parliament.

“The Code update process has been in motion since January 2013 and the FCA has been pleased with the level of consultation from both Governments in that time.

“It appears our concerns in relation to the broad application of penalties, and the potential for them to apply to trivial breaches, have been addressed by the Minister. We support the introduction of penalties to deal with those businesses that seek to masquerade as franchises or ignore or commit flagrant breaches of the Code. Those organisations are not welcome as FCA members, and should feel the full force of the law.

“With the passing of the CCA amendment, we now wait to see the final version of the revised Franchising Code of Conduct.

“We welcome the ongoing commitment of the Government to enhancing the Australian franchising sector – a sector that can already boast world’s best practice thanks to its practical regulation and passionate business people,” Paul said.

The Franchising Code of Conduct update is expected to be introduced to Parliament in time for implementation at the start of 2015.