ACCC, ASIC put to work on ‘exploitative’ franchising sector

The consumer watchdog should be given new powers to police the franchising industry, according to a parliamentary inquiry which has found the current regulatory regime failed to stop “systemic poor conduct” and “exploitative behaviour”.

Additional powers and fresh approaches for the regulators formed several of the key recommendations from the probe including a call for the Australian Competition and Consumer Commission to be given powers to stop franchisors from selling or opening unprofitable stores to generate up-front sign-on fees.

Domino’s Pizza was one of the companies the inquiry looked at. Credit:AAP

The Australian Securities and Investments Commission (ASIC) should also monitor this practice – called “churning and burning” – at listed companies with an eye to their continuous disclosure obligations, the report said.

ASIC should also take a “much more proactive role” in monitoring corporate governance at franchisors and to take enforcement action when necessary.


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