The Federal Government’s Office of Small Business (OSB) is conducting further consultation with the franchise sector to provide greater detail around a number of recommendations by the recent Matthews Report into changes to the disclosure provisions of the Franchising Code of Conduct.

The Franchise Advisory Centre has been invited by the OSB to provide input and welcomes feedback from franchisors, franchisees and service providers for its submission.

The OSB consultation does not change the Government's acceptance or otherwise of recommendations from the Matthrews Report, but is understood to be used in assisting develop a framework for the implementation of these recommendations.

Recommendations for consideration during this process are understood to include the following (as reported in the February 2007 official Government response to the review of the disclosure provisions of the Franchising Code of Conduct ):  

#6. Auditing of marketing and other co-operative funds
The annual financial statement of marketing or other co-operative funds, receipts and expenses prepared pursuant to clause 17 of the Code be subject to compulsory annual audit by a registered company auditor.
Government's response: Agreed. The Government will go further than the recommendation and require that the Code be amended so that the franchisees are provided with a full account of these funds and with the auditor's reports. 

#10. Disclosure of the business experience of all who have or may have management responsibilities.
That item 3.1 of Annexure 1 be amended to remove the executive officer exemption from the class of persons about which a summary of relevant business experience in the last 10 years must be provided. That Item 2.6 of Annexure 1 be amended to substitute for the term “executive officer” (which is not defined in the Corporations Act 2001), the concept of a person who is concerned in, or takes part in, the management of the franchisor (regardless of the person’s designation and whether or not the person is a director of the franchisor).”
Government's response: Agreed in principle. While knowledge about the business experience of officers of corporate entities is relevant to prospective and existing franchisees, the Government is of the view that the recommendation may inadvertently capture a range of persons whose business experience is of no relevance to the operation of the franchise. The Government notes recent amendments to the Corporations Law in this area, and will consult further with stakeholders to determine whether an appropriate definition can be formulated. 

#14. Franchises currently excluded from the Code
Delete clause 5(3)(c).
Government's response: Agreed in principle subject to consultation with industry.

#32. Definitions of "executive officer" and "officer"
That, in view of the repeal of the definition of “executive officer under the Corporations Law: (a) clause 6(2)(c) of the Code be amended to replace the term “executive officer” with the term “officer”; (b) Item 2.6 of Annexure 1 be amended in accordance with Recommendation 10; and (c) clause 3(2) of the Code be amended to delete the term “executive officer”, and the usage of that term in the rest of the Code and the Annexures be reviewed.
Government's response: Agreed in principle. The Government notes recent amendments to the Corporations Law in this area, and will consult further with stakeholders to determine whether an appropriate definition can be formulated.

Please provide your input on these issues to the Franchise Advisory Centre by close of business Thursday, April 5 by email to or phone Jason Gehrke on (07) 3716 0400.