Stephens Lawyers & Consultants explains ACCC franchise audits

With the enforcement powers of the Australian Competition & Consumer Commission (ACCC) being extended as of January 2011, Stephens Lawyers & Consultants offers a quick guide to these extended powers and explains how they can help in the event of an audit.

How does the extended powers of the ACCC affect the franchise business industry?

Under the Australian Consumer Law reforms the ACCC now has increased audit powers to monitor the compliance with industry codes as set out in the Competition and Consumer Act 2010. One of these codes is the Franchising Code. The ACCC has announced that it will be both: concentrating on auditing franchisors who have a history of non-compliance or who they have received multiple complaints about; and carrying out random audits of franchisor compliance.

How will I know if my franchise is being audited?

The ACCC intends to use its audit powers to quickly determine whether franchisors are compliant with the Franchising Code of Conduct. It will issue a written notice for the franchisor to provide them with information and documents, which may include:

• termination notices
• marketing fund financial statements
• lease agreements
• franchise agreements, and
• disclosure documents,
• along with other paperwork.

What will the written audit notice from the ACCC contain?

It will include instructions on how to comply with the audit, such as:

• specification of the documents and information required by the ACCC
• 21 days notice to provide the ACCC with the requested documentation
• explanation of how to request a time extension, and
• warning against providing misleading or false information

No. The ACCC will be carrying out random auditing, so receiving an audit notice does not always indicate non-compliance. Simply make sure that you read and fully understood the notice and its instructions before ensuring that you correctly follow them.

What should I do if I receive an audit notice?

If you receive an audit notice you must follow all of the instructions. It is advisable to contact an expert, like Stephens Lawyers & Consultants, who can ensure that you have fully understood what you need to do and the documentation that you need to generate or provide.

21 days is too soon to provide the ACCC with all of the documentation, what should I do?

The audit notice sets out the procedure for requesting a time extension. If you anticipate that 21 days is not enough time contact the ACCC immediately.

Stephens Lawyers & Consultants will be able to help you to apply for an extension.

What happens if the audit discovers non-compliance?

The ACCC will deal with any non-compliance as set out by its Compliance and Enforcement policy.

If the audit uncovers any minor breaches of the franchise industry code the ACCC will inform you of how to rectify the matter, often administratively.

For severe or deliberate non-compliance issues further enforcement action may be taken by the ACCC.

Stephens Lawyers & Consultants can offer advice on moving forward. They offer assistance with complying with the Franchising Code and have extensive experience in litigation, franchising and consumer law.

Does Stephens Lawyers & Consultants have any advice for complying with the Franchising Code?

Stephens Lawyers & Consultants are happy to arrange an appointment to help franchisors to comply with the Franchising Code.

Their main advice is to visit the ACCC website to familiarise yourself with the Franchising Code of Conduct and the ACCC’s audit powers, as well as to ensure that all relevant documents are in good order, compliant with the obligations of a franchisor.