Franchise operator Venue Smart Pty Ltd, trading as Venue Smart, has paid $59,400 in penalties after the ACCC issued it with 3 infringement notices for separate alleged contraventions of the Franchising Code of Conduct 2024.
We alleged Venue Smart Pty Ltd breached the code by failing to:
- prepare an annual financial statement as required by the code for its marketing fund for the 2024-25 financial year
- keep a separate account with a financial institution for franchisee payments into its marketing fund for the 2024-25 financial year
- provide the required information for inclusion on the franchise disclosure register at least 14 days before entering into a franchise agreement with a prospective franchisee.
The code sets out rules for franchisors with specific purpose funds, including marketing funds. These rules help improve transparency for franchisees who pay into these funds.
Among their obligations, fund administrators must:
- prepare an annual financial statement that gives franchisees meaningful information about what money went into the fund, where it came from, and how it was spent
- keep fees paid into the fund in a separate account with a financial institution.
Under the code, franchisors must also provide certain information for inclusion on the franchise disclosure register within set timeframes.
Franchisors must make sure they understand and comply with all their obligations under the code.
Background
Venue Smart Pty Ltd is an Australian proprietary limited company that franchises a business trading under the same name. The franchise offers in-store and online payment services to businesses across Australia.
The franchising code is a mandatory industry code prescribed under the Competition and Consumer Act 2010. It regulates the conduct of participants in franchising to address the power imbalance between franchisors and franchisees.
The franchise disclosure register is a free online platform with information about franchise systems in Australia. This includes information about franchise system size and distribution, setup costs and ongoing payments and contact details.
The ACCC can issue an infringement notice when it has reasonable grounds to believe a person or business has contravened a civil penalty provision of the code.
Paying a penalty specified in an infringement notice is not an admission of a contravention of the code.
