ACCC to crack down on unfair contract terms

By Nick Hall | 22 Aug 2019 View comments

Small business is in for a compliance overhaul, with the Australian Competition and Consumer Commission (ACCC) committing to crackdown on unfair contract terms.

In its latest Small Business in Focus report, the ACCC outlined a growing concern over the amount of SME and franchise operators being taking advantage of. The bi-yearly report focuses on issues surrounding the small business sector, profiling the typical operator in distress.

The most recent review found that in the last six months, small business operators had reported $2.5m in scam losses.

Mick Keogh, ACCC deputy chair said that watchdog had been working diligently on improving conditions for franchisees in light of emerging sector unease.

“Unfair contract terms are a big focus for the ACCC, and we want to make sure small businesses are not at a disadvantage because of one-sided ‘take it or leave it’ contracts,” Keogh said.

“Already this year, the ACCC has undertaken a number of in-depth investigations and taken action to ensure that small businesses receive the protection of the business-to-business unfair contract terms law, which the Australian Government introduced in 2016.”

Unfair contract terms review

In order to ensure compliance and avoid a dispute, Keogh urged all small business owners and operators to review their current agreements.

“We encourage small businesses to review their standard form contracts and if a contract term looks unfair, call it out and seek to have it changed,” Keogh said.

“This year we have also obtained two court outcomes against franchisors for breaches of the Franchising Code and Australian Consumer Law, and will continue to focus on ensuring small businesses have the protection of the law, and by ensuring compliance with industry codes in accordance with our Compliance and Enforcement Policy and Priorities.”

The crackdown is a positive move for the franchising sector, and marks a decidedly different focus than in previous years.

The latest Small Business in Focus report revealed that reported Franchising Code related issues had dramatically decreased in the January to June 2019 period. Issues concerning inadequate disclosure had more than halved, along with concerns over franchisors not acting in good faith, compared with the July to December 2018 period.

The ACCC expects this number to further diminish as the recently announced Franchising Taskforce takes effect in the second half of 2019.

Additionally, the watchdog has also increased its range of small businesses and franchising resources. To accommodate multicultural operators, these resources include translations of franchising and country of origin information into Cantonese, Mandarin, Hindi and more.