Collective Bargaining in Franchising

The Australian Competition and Consumer Commission (ACCC) has introduced a new class exemption to take effect in early 2021. This will allow franchisees to collectively bargain and negotiate with their franchisor without having to first seek ACCC approval.

It means a group of franchisees of any size can negotiate together with their franchisor about common issues such as terms, conditions and/or prices. The exemption will also extend to:

  1. small businesses with a turnover of less than $10 million in the preceding financial year collectively negotiating with their suppliers, processors and customers; and

  2. fuel retailers (regardless of turnover) collectively negotiating with their fuel wholesaler.

Until now, collective bargaining was a breach of competition laws and carried significant penalties. Collective bargaining required authorisation or notification from the ACCC before engaging in it. The new exemption has been introduced because the ACCC is satisfied that this conduct is unlikely to substantially lessen competition or is likely to result in a public benefit.

This exemption will result in time and cost savings for both franchisors and franchisees, and will benefit all parties involved through a much simpler and quicker process:

  1. Franchisees may be able to negotiate better terms and conditions that they may have been unable to negotiate on their own.

  2. Franchisees will be able to share their costs of negotiation across their group.

  3. Franchisors will save time and costs negotiating with a group, rather than multiple times and with each franchisee individually.

Importantly, these changes will not force franchisors to collectively negotiate with franchisees if they do not want to. It is voluntary and will be the franchisor’s choice whether to negotiate with a group of franchisees or with each franchisee individually.

Moving forward, before engaging in collective bargaining, the parties will only need to fill out and lodge a simple one-page form with the ACCC, free of charge. Legal protection will then start automatically.

The team at Salerno Law are experienced in acting for both franchisors and franchisees in all aspects of franchising law. Please contact us if you need our assistance.

By Luke McKavanagh

DISCLAIMER: This article is only meant to give you general information and should not be relied on as legal advice. Speak to one of our lawyers for more information.

Salerno Law is managed by Emma Salerno, Managing Partner and CEO, who has a wealth of experience from operating her own businesses across Australia as well as a range of in-house and commercial experience both in Australia and overseas.