Franchisee associations: your right to organise and the $10 million penalty tier

• The protection covers prospective franchisees as well as current ones, and association with other franchisees or prospective franchisees.
• An individual who breaches it faces a penalty of up to $500,000 (s64).
• The same rule was clause 33 of the 2014 Code, with the higher penalty tier in place since 2022.
• Two or more franchisees with similar disputes can agree to resolve them together, and can discuss them despite confidentiality clauses (s73).
• Under an ACCC class exemption, franchisees of the same franchisor can bargain collectively with it regardless of their size, once they give a free one-page notice.

Section 64 is short. It targets any conduct by a franchisor that would restrict or impair these freedoms.

• Your freedom to form an association, such as an independent franchisee association or committee.
• Your ability to associate with other franchisees for any lawful purpose, such as sharing experiences or preparing a joint approach to the franchisor.
• The same freedoms for prospective franchisees, whom the ACCC's information statement encourages to talk to current and former franchisees before signing.
• The test is the effect of the conduct: whether it would restrict or impair those freedoms.
• The purpose must be lawful. An association doesn't shield members from other laws, such as competition law.
• The ACCC enforces the Code and can take a franchisor to court seeking penalties.

The Code doesn't list examples, and whether particular conduct breaches s64 is for a court to decide. If you see conduct like this, write down what happened, when and who was involved, and get advice.

• Threats of termination, non-renewal or withdrawn support for joining or organising an association.
• Clauses or policies that forbid contacting other franchisees, or require the franchisor's approval to meet.
• Treating association members less favourably, for example in territory, supply or transfer decisions.
• Demands to report on association meetings, or to hand over members' communications.
• Using confidentiality clauses to stop franchisees comparing similar disputes, which s73(3) expressly allows them to discuss.
• Discouraging prospective franchisees from speaking to existing franchisees.

• An independent association is set up and run by franchisees. A franchise advisory council is usually set up by the franchisor to consult franchisees; it can be useful, but an association you run yourselves can act independently.
• Structures range from an informal group to an incorporated association under state or territory law, which can hold funds and enter contracts.
• Common activities include sharing information, commissioning independent advice, speaking to the franchisor for members and coordinating similar disputes.
• Decide how it will be funded, such as member subscriptions, and keep its money separate from any franchisor-controlled fund.
• The disclosure document helps you find members. It must list each existing franchisee's business address (unless it is a home address), business phone number and start year, though systems with more than 50 franchises may limit this to your state, territory, region or metropolitan area (item 6).
• It must also give former franchisees' names, locations, phone numbers and email addresses where available, unless a former franchisee has asked for theirs to be withheld (item 6(5) and s63).

1. Two or more franchisees with similar disputes with the same franchisor may agree with it to resolve them in the same way (s73(2)).
2. To decide whether to do that, franchisees can discuss their disputes with each other despite confidentiality requirements in their agreements (s73(3)).
3. If they can't agree how to resolve them, all the franchisees who can't agree, or the franchisor, can refer the matter to a single mediator or conciliator for one process. Each dispute stays separate (s73(4)).
4. If they can't agree on who the practitioner should be, they can ask ASBFEO to appoint one, and ASBFEO must do so within 14 days of the request (s72(5) and s73(5)).
5. If all the franchisees make the referral or request together, the practitioner can run a single process even if the franchisor objects, and the franchisor must still attend and try to resolve the disputes (s73(6) and s74).
6. Costs are split equally for each dispute unless agreed otherwise, and each party pays its own attendance costs (s77). ASBFEO estimates a mediation at about $4,000, or $2,000 for each of two parties.
7. New car dealers have an extra right to ask the franchisor to deal with them together about disputes of the same nature (s88).

Negotiating as a group could otherwise risk breaching competition law. The ACCC's collective bargaining class exemption gives franchisees legal protection, on these terms.

• Franchisees whose agreements are governed by the Franchising Code can bargain collectively with their own franchisor, including through group mediation, regardless of their size.
• The exemption's $10 million turnover limit applies only if the group wants to bargain with someone else, such as a supplier.
• The group gives the ACCC a free one-page notice. Protection starts when the notice is given, provided members are eligible, so lodge it before bargaining begins.
• The notice must also be given to the franchisor when the group first approaches it.
• The franchisor doesn't have to negotiate with the group, and can choose to deal with franchisees individually.
• The exemption doesn't cover collective boycotts, which need ACCC authorisation or a notification instead.
• The class exemption runs until 30 June 2030 unless the ACCC revokes it.

1. Find other franchisees through the disclosure document's contact lists and your local network.
2. Agree a purpose in writing, such as sharing information, representing members or bargaining collectively, and keep it lawful.
3. Choose a structure, and set simple rules on membership, voting, fees and confidentiality.
4. Elect representatives, and decide who speaks to the franchisor and how members are kept informed.
5. If you plan to negotiate as a group, give the ACCC's collective bargaining notice first, then give it to the franchisor.
6. Keep discussions to your dealings with the franchisor, and get competition-law advice before members discuss anything else, such as the prices they charge customers.
7. Record any conduct that seems aimed at stopping the association, and consider reporting it to the ACCC.

• Does your agreement or operations manual restrict contact with other franchisees?
• Do you have current contact details for franchisees in your state or region?
• Is there already an independent association, a franchisor-run advisory council, or both?
• Do other franchisees share your issue, and would a single mediation suit you?
• Have you given the ACCC a collective bargaining notice before negotiating as a group?
• Are you keeping dated records of any pressure not to organise?