ACCC franchise report a reminder to check for unfair contracts

A warning from the Australian Competition and Consumer Commission to franchisors following the introduction of tougher unfair contract laws is a reminder to all small businesses to check the agreements they offer and receive.

The ACCC recently warned franchisors to urgently review and amend their standard form franchise agreements or be prepared for potential enforcement action after a review of franchising contracts found wide-ranging concerns. Every franchising agreement the ACCC reviewed contained potentially unfair contract terms.

Changes to Australian Consumer Law which took effect on 9 November 2023 prohibit businesses from proposing, using, or relying on unfair contract terms in standard form contracts with consumers and small businesses. Courts can impose substantial penalties on businesses and individuals who include unfair terms in their standard form contracts.

The changes apply to standard form contracts made or renewed on or after 9 November 2023 or to a term or a contract that is varied or added on or after 9 November 2023.

NSW Small Business Commissioner Chris Lamont said while some of the changes will not apply to contracts until they are renewed, or a new contract is entered into, businesses should be proactive in reviewing their standard form contracts now.

He also urged small businesses to review any new contracts they were considering, particularly for online subscription services, noting recent complaints received by the Commission.