Franchising still an ACCC priority in 2021

Franchising may not be the top priority for the Australian Competition and Consumer Commission this year but it’s still on the list of concerns.

In his annual address to Committee for Economic Development Australia (CEDA), ACCC chair Rod Sims announced the Commission’s compliance and enforcement priorities for 2021.

In regard to issues under investigation right now, he said “The ACCC has a number of important consumer and fair trading cases before the courts, including franchising (Retail Food Group, Megasave), motor vehicles (Mazda and VW) and digital (Google and Facebook).

“Of particular significance is our case against Telstra which was commenced in November last year. Telstra has already admitted it acted unconscionably when sales staff at five licensed Telstra-branded stores signed up 108 Indigenous consumers to multiple post-paid mobile contracts which they did not understand and could not afford.”

Sims went on to highlight areas of concern in the franchising sector.

“We will continue our work to ensure that small businesses receive the protections guaranteed by the competition and consumer laws, with a particular focus on the franchise sector. The ACCC continues to receive reports about misleading representations made by franchisors about franchises, in particular earnings capacity and the use of marketing funds,” he said.

Sims said the ACCC will continue to advocate for reforms to address key issues that have an impact on consumers and small businesses.

“Compliance and enforcement action in relation to the Consumer Guarantee Regime and the Unfair Contract Terms provisions have identified, in our view, important deficiencies in the law that we believe need to be addressed,” he said.

Sims also suggested Australia’s consumer law framework needs an unfair trading practice prohibition.

“This is an issue that Australian governments and agencies are already discussing following the review of the Australian Consumer Law in 2018 and it was a key recommendation that we have made following our Digital Platform and Perishable Goods inquiries,” he said.

Read the full speech here.