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A Bill for an Act to amend the law in relation to franchising, and for related purposes
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Registered 03 Sep 2020
Introduced Senate 02 Sep 2020
Table of contents.

 

2019‑2020

 

The Parliament of the

Commonwealth of Australia

 

THE SENATE

 

 

 

 

Presented and read a first time

 

 

 

 

 

 

 

Franchising Laws Amendment (Fairness in Franchising) Bill 2020

 

No.      , 2020

 

(Senator O’Neill)

 

 

 

A Bill for an Act to amend the law in relation to franchising, and for related purposes

  

  


Contents

1............ Short title............................................................................................. 1

2............ Commencement................................................................................... 1

3............ Schedules............................................................................................ 2

Schedule 1—Franchising Code amendments                                                        3

Part 1—Main amendments                                                                                         3

Competition and Consumer (Industry Codes—Franchising) Regulation 2014  3

Part 2—Consequential amendments                                                                    13

Australian Small Business and Family Enterprise Ombudsman Act 2015     13

Part 3—Additional provisions                                                                                14

Schedule 2—Quantum of penalties for breach of the Franchising Code of Conduct     15

Competition and Consumer Act 2010                                                                   15

 

 


A Bill for an Act to amend the law in relation to franchising, and for related purposes

The Parliament of Australia enacts:

1  Short title

                   This Act is the Franchising Laws Amendment (Fairness in Franchising) Act 2020.

2  Commencement

             (1)  Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

 

Commencement information

Column 1

Column 2

Column 3

Provisions

Commencement

Date/Details

1.  The whole of this Act

The day after this Act receives the Royal Assent.

 

Note:          This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.

             (2)  Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.

3  Schedules

                   Legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Note:          Subject to item 27 of Schedule 1 to this Act, the provisions of the Competition and Consumer (Industry Codes—Franchising) Regulation 2014 amended or inserted by this Act, and any other provisions of that instrument, may be amended or repealed by an instrument made under section 51AE of the Competition and Consumer Act 2010 (see subsection 13(5) of the Legislation Act 2003).

Schedule 1Franchising Code amendments

Part 1Main amendments

Competition and Consumer (Industry Codes—Franchising) Regulation 2014

1  Clause 21 of Schedule 1

Omit “mediation” (wherever occurring), substitute “mediation or arbitration”.

2  Clause 35 of Schedule 1

Before “A party”, insert “(1)”.

3  At the end of clause 35 of Schedule 1

Add:

             (2)  If:

                     (a)  a franchisor has entered into franchise agreements with 2 or more franchisees; and

                     (b)  2 or more of the franchisees each have a dispute of the same nature with the franchisor;

then 2 or more of the franchisees mentioned in paragraph (b) may ask the franchisor to deal with the franchisees together about the dispute.

4  Clause 36 of Schedule 1

Omit “mediation” (wherever occurring), substitute “mediation or arbitration”.

5  After subclause 38(2) of Schedule 1

Insert:

          (2A)  The complainant and the respondent must attempt to resolve the dispute before taking action to resolve the dispute by mediation or arbitration.

6  Subclause 38(3) of Schedule 1

Repeal the subclause, substitute:

             (3)  If the parties cannot agree how to resolve the dispute within 3 weeks:

                     (a)  either party may refer the matter to a mediator for mediation under:

                              (i)  a franchise agreement; or

                             (ii)  this code; or

                     (b)  the parties may agree that the dispute is to be resolved by arbitration, even if any agreement between the parties relating to the resolution of disputes does not contain a provision to provide for arbitration.

7  Subclause 38(4) of Schedule 1

Repeal the subclause (including the note), substitute:

             (4)  If a party has decided to refer the matter to a mediator for mediation but the parties cannot agree on who should be the mediator, either party may ask the mediation and arbitration adviser to appoint a mediator.

Note:          For the mediation and arbitration adviser, see clause 44.

             (5)  If the parties have agreed that the dispute is to be resolved by arbitration the parties must either:

                     (a)  agree on who, from the list of persons compiled by the mediation and arbitration adviser under paragraph 44(3)(b), should be the arbitrator for the dispute; or

                     (b)  if both parties cannot agree on who should be the arbitrator, request the mediation and arbitration adviser to appoint an arbitrator for the dispute.

Note:          For the mediation and arbitration adviser, see clause 44.

             (6)  The complainant may, at any time, withdraw the complaint by notice in writing to the respondent.

8  Subclause 39(6) of Schedule 1

Omit “mediation adviser”, substitute “mediation and arbitration adviser”.

9  At the end of clause 39 of Schedule 1

Add:

             (7)  If an agreement is reached in relation to the dispute, the mediator must, within 14 days after the agreement is reached:

                     (a)  set out, in writing, the terms of the agreement; and

                     (b)  give a copy of the terms to each party to the dispute; and

                     (c)  notify the mediation and arbitration adviser that an agreement has been reached.

10  At the end of Division 2 of Part 4 of Schedule 1

Add:

39A  Arbitration

             (1)  The mediation and arbitration adviser:

                     (a)  must appoint an arbitrator within 14 days after receiving the request under paragraph 38(5)(b) unless the mediation and arbitration adviser is satisfied that the complaint giving rise to the dispute:

                              (i)  is frivolous or vexatious; or

                             (ii)  has previously been the subject of another arbitration; or

                            (iii)  was otherwise not made in good faith; and

                     (b)  must give the parties to the dispute, in writing, details of the arbitrator appointed.

Conduct of arbitration

             (2)  Subject to subclause (3), the arbitrator must decide:

                     (a)  how the arbitration is to be conducted (for example, by videoconference, telephone or in person); and

                     (b)  the time and place for the arbitration; and

                     (c)  the day the arbitration commences.

             (3)  The arbitration must be conducted in Australia.

Arbitrator must notify mediation and arbitration adviser that arbitration has commenced

             (4)  Within 14 days after the arbitration has commenced, the arbitrator must notify the mediation and arbitration adviser, in writing, that the arbitration has commenced and of the nature of the dispute.

Note:          The arbitrator decides under paragraph (2)(c) when an arbitration commences.

Attendance at arbitration

             (5)  Each party to the dispute must attend the arbitration either in person or by another means of communication, including by telephone or videoconference.

             (6)  For the purposes of subclause (5), a party is taken to attend an arbitration if:

                     (a)  the party is represented at the arbitration by a person who has the authority to enter into an agreement to settle the dispute on behalf of the party; or

                     (b)  the party is represented at the arbitration by a person (the arbitration representative) and a person who has the authority to enter into an agreement to settle the dispute on behalf of the party is contactable, at the time for arbitration, by the arbitration representative.

Arbitrator must give notice of successful arbitration

             (7)  If the dispute is resolved, the arbitrator must, within 14 days after the dispute is resolved:

                     (a)  set out, in writing, the terms of the resolution; and

                     (b)  give a copy of the terms to each party to the dispute; and

                     (c)  notify the mediation and arbitration adviser that the dispute has been resolved.

11  After subclause 40(2) of Schedule 1

Insert:

          (2A)  The complainant and the respondent must attempt to resolve the dispute before taking action to resolve the complaint by mediation or arbitration.

12  Subclause 40(3) of Schedule 1

Repeal the subclause, substitute:

             (3)  If the parties cannot agree how to resolve the dispute within 3 weeks:

                     (a)  either party may refer the matter to a mediator for mediation under:

                              (i)  a franchise agreement; or

                             (ii)  this code; or

                     (b)  the parties may agree that the dispute is to be resolved by arbitration, even if any agreement between the parties relating to the resolution of disputes does not contain a provision to provide for arbitration.

13  Subclause 40(4) of Schedule 1

Repeal the subclause (including the note), substitute:

             (4)  If a party has decided to refer the matter to a mediator for mediation but the parties cannot agree on who should be the mediator, either party may ask the mediation and arbitration adviser to appoint a mediator.

Note:          For the mediation and arbitration adviser, see clause 44.

             (5)  If the parties have agreed that the dispute is to be resolved by arbitration the parties must either:

                     (a)  agree on who, from the list of persons compiled by the mediation and arbitration adviser under paragraph 44(3)(b), should be the arbitrator for the dispute; or

                     (b)  if both parties cannot agree on who should be the arbitrator, request the mediation and arbitration adviser to appoint an arbitrator for the dispute.

Note:          For the mediation and arbitration adviser, see clause 44.

             (6)  The complainant may, at any time, withdraw the complaint by notice in writing to the respondent.

14  Subclause 41(6) of Schedule 1

Omit “mediation adviser”, substitute “mediation and arbitration adviser”.

15  At the end of clause 41 of Schedule 1

Add:

             (7)  If an agreement is reached in relation to the dispute, the mediator must, within 14 days after the agreement is reached:

                     (a)  set out, in writing, the terms of the agreement; and

                     (b)  give a copy of the terms to each party to the dispute; and

                     (c)  notify the mediation and arbitration adviser that an agreement has been reached.

16  At the end of subclause 42(4) of Schedule 1

Add:

             ; and (e)  that the parties may agree to refer the matter to arbitration.

17  Paragraph 42(5)(a) of Schedule 1

Omit “mediation adviser”, substitute “mediation and arbitration adviser”.

18  At the end of clause 42 of Schedule 1

Add:

             (6)  If a mediation is terminated under this clause:

                     (a)  the parties may agree to refer the dispute to arbitration; and

                     (b)  the parties do not need to comply again with requirements in clause 38 or 40 in relation to the dispute or the referral to arbitration.

             (7)  If the parties have agreed that the dispute is to be resolved by arbitration the parties must either:

                     (a)  agree on who, from the list of persons compiled by the mediation and arbitration adviser under paragraph 44(3)(b), should be the arbitrator for the dispute; or

                     (b)  if both parties cannot agree on who should be the arbitrator, request the mediation and arbitration adviser to appoint an arbitrator for the dispute.

Note:          For the mediation and arbitration adviser, see clause 44.

19  At the end of Division 3 of Part 4 of Schedule 1

Add:

Subdivision CArbitration

43A  Arbitration

             (1)  The mediation and arbitration adviser:

                     (a)  must appoint an arbitrator within 14 days after receiving the request under paragraph 40(5)(b) or 42(7)(b) unless the mediation and arbitration adviser is satisfied that the complaint giving rise to the dispute:

                              (i)  is frivolous or vexatious; or

                             (ii)  has previously been the subject of another arbitration; or

                            (iii)  was otherwise not made in good faith; and

                     (b)  must give the parties to the dispute, in writing, details of the arbitrator appointed.

Conduct of arbitration

             (2)  Subject to subclause (3), the arbitrator must decide:

                     (a)  how the arbitration is to be conducted (for example, by videoconference, telephone or in person); and

                     (b)  the time and place for the arbitration; and

                     (c)  the day the arbitration commences.

             (3)  The arbitration must be conducted in Australia.

Arbitrator must notify mediation and arbitration adviser that arbitration has commenced

             (4)  Within 14 days after the arbitration has commenced, the arbitrator must notify the mediation and arbitration adviser, in writing, that the arbitration has commenced and of the nature of the dispute.

Note:          The arbitrator decides under paragraph (2)(c) when an arbitration commences.

Attendance at arbitration

             (5)  Each party to the dispute must attend the arbitration either in person or by another means of communication, including by telephone or videoconference.

             (6)  For the purposes of subclause (5), a party is taken to attend an arbitration if:

                     (a)  the party is represented at the arbitration by a person who has the authority to enter into an agreement to settle the dispute on behalf of the party; or

                     (b)  the party is represented at the arbitration by a person (the arbitration representative) and a person who has the authority to enter into an agreement to settle the dispute on behalf of the party is contactable, at the time of the arbitration, by the arbitration representative to provide final agreement.

Arbitrator must give notice of successful arbitration

             (7)  If the dispute is resolved, the arbitrator must, within 14 days after the dispute is resolved:

                     (a)  set out, in writing, the terms of the resolution; and

                     (b)  give a copy of the terms to each party to the dispute; and

                     (c)  notify the mediation and arbitration adviser that the dispute has been resolved.

43B  Termination of arbitration

             (1)  The arbitrator conducting an arbitration of a dispute in accordance with this Subdivision must terminate the arbitration if the complainant mentioned in clause 40 requests the arbitrator to do so.

             (2)  If the arbitrator terminates an arbitration under subclause (1), the arbitrator must issue a certificate stating:

                     (a)  the names of the parties to the arbitration; and

                     (b)  the nature of the dispute that was the subject of the arbitration; and

                     (c)  that the arbitration has been terminated; and

                     (d)  that the dispute has not been resolved.

             (3)  The arbitrator must give a copy of the certificate to:

                     (a)  the mediation and arbitration adviser; and

                     (b)  each party to the dispute.

43C  Costs of arbitration

             (1)  The parties are equally liable for the costs of arbitration under this Subdivision unless they agree otherwise.

             (2)  The parties must pay for their own costs of attending the arbitration.

             (3)  In this clause:

costs of arbitration under this Subdivision include the following:

                     (a)  the cost of the arbitrator;

                     (b)  the cost of room hire;

                     (c)  the cost of any additional input (including expert reports) agreed by both parties to be necessary to conduct the arbitration.

20  Division 4 of Part 4 of Schedule 1 (heading)

Omit “appointments”, substitute “and arbitration adviser etc.”.

21  Clause 44 of Schedule 1

Repeal the clause, substitute:

44  Mediation and arbitration adviser

             (1)  There is to be a mediation and arbitration adviser.

             (2)  The mediation and arbitration adviser is the person who for the time being is holding, occupying or performing the duties of the position of Deputy Ombudsman, or an equivalent position, in relation to the Australian Small Business and Family Enterprise Ombudsman.

Note:          For the staff assisting the Ombudsman, see section 33 of the Australian Small Business and Family Enterprise Ombudsman Act 2015.

             (3)  The mediation and arbitration adviser must compile:

                     (a)  a list of persons who are to be mediators for the purposes of this Part; and

                     (b)  a list of persons who are to be arbitrators for the purposes of this Part.

22  Clause 45 of Schedule 1

Omit “mediation adviser”, substitute “mediation and arbitration adviser”.

23  At the end of Division 4 of Part 4 of Schedule 1

Add:

46  Information on mediation and arbitration

             (1)  The annual report prepared by the Department and given to the Minister under section 46 of the Public Governance, Performance and Accountability Act 2013 for a period must include the following information in relation to the period:

                     (a)  the number of requests received by the mediation and arbitration adviser:

                              (i)  for the appointment of a mediator;

                             (ii)  for the appointment of an arbitrator;

                     (b)  the number of occasions on which the mediation and arbitration adviser received a request for the appointment of an arbitrator but did not appoint one;

                     (c)  the number of certificates given to the mediation and arbitration adviser:

                              (i)  by a mediator stating that a mediation had finished and that the dispute had not been resolved;

                             (ii)  by an arbitrator stating that an arbitration had been terminated;

                     (d)  the number of occasions on which the mediation and arbitration adviser was notified:

                              (i)  by a mediator that a dispute had been resolved;

                             (ii)  by an arbitrator that a dispute had been resolved.

             (2)  In this clause:

Department means the Department administered by the Minister administering the Australian Small Business and Family Enterprise Ombudsman Act 2015.

Minister means the Minister administering the Australian Small Business and Family Enterprise Ombudsman Act 2015.

Part 2Consequential amendments

Australian Small Business and Family Enterprise Ombudsman Act 2015

24  Section 4 (after paragraph (b) of the definition of alternative dispute resolution processes)

Insert:

                   (ba)  arbitration; and

25  Section 4 (definition of alternative dispute resolution processes)

Omit:

but does not include:

                     (g)  arbitration; or

                     (h)  court procedures or services.

substitute:

but does not include court procedures or services.

Part 3Additional provisions

26  Revocation of appointment of Franchising Mediator Adviser

An appointment of a mediation adviser under clause 44 of Schedule 1 to the Competition and Consumer (Industry Codes—Franchising) Regulation 2014 that is in force immediately before the commencement of this item is revoked on the commencement of this item.

27  Amendment or repeal of relevant clauses

(1)       This item applies to a legislative instrument that:

                     (a)  is made after the commencement of this Schedule; and

                     (b)  amends or repeals provisions of the Competition and Consumer (Industry Codes—Franchising) Regulation 2014.

(2)       If the legislative instrument has the effect of:

                     (a)  removing the availability of arbitration as a means for participants in franchising to resolve disputes; or

                     (b)  altering the person who is the mediation and arbitration adviser to be a person other than one of the following:

                              (i)  the Australian Small Business and Family Enterprise Ombudsman;

                             (ii)  a delegate of the Ombudsman;

                            (iii)  a person assisting the Ombudsman under section 33 of the Australian Small Business and Family Enterprise Ombudsman Act 2015;

            then the instrument does not come into effect until it has been approved by resolution of each House of the Parliament.

Schedule 2Quantum of penalties for breach of the Franchising Code of Conduct

  

Competition and Consumer Act 2010

1  Subsection 51AE(2)

Omit “If regulations prescribe”, substitute “Except as provided by subsection (2A), if regulations prescribe”.

2  After subsection 51AE(2)

Insert:

          (2A)  If regulations prescribe an industry code relating to participants in franchising, a civil penalty provision of the industry code must provide that the maximum penalty amount for a contravention by a body corporate of the provision is the greater of the following:

                     (a)  $10,000,000;

                     (b)  if a court can determine the value of the benefit that the body corporate, and any body corporate related to the body corporate, have obtained directly or indirectly and that is reasonably attributable to the contravention—3 times the value of that benefit;

                     (c)  if that court cannot determine the value of that benefit—10% of the annual turnover of the body corporate during the 12‑month period ending at the end of the month in which the contravention happened or began.

          (2B)  For the purposes of paragraph (2A)(c), annual turnover has the same meaning as in Division 1 of Part IV.