Consumer Protection Policy for Franchisees of Failed Franchisors

Abstract

Over time, society's needs and expectations have led to franchisees being recognised as a new category of consumer and, since 1998, as a 'business consumer' under section 51AC Trade Practices Act 1974 (Cth) (TPA). In Part I of this paper, consumer policy objectives are identified, particularly in so far as they relate to franchisor failure. Three specific areas of the TPA are briefly explored in Part II for their potential as avenues of redress for franchisees of failed franchisors. They are; section 51AC, in relation to unconscionable conduct, the Franchising Code of Conduct (enacted under section 51AE, TPA), and sections 69 to 74H in relation to warranties implied into contracts for purchase of goods or services.In Part III some of the 'elephants in the room are introduced. It is concluded that whilst rehabilitation rather than vilification now awaits failed business people, the consumer protection law is yet to respond to the needs and expectations of franchisees of failed franchisors.