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Amended Casual Mall Licensing Code a positive step for franchised retailers

Written on the 15 January 2018 by Franchise Council of Australia

"The Franchise Council of Australia (FCA) welcomes the ACCC's re-authorisation of an amended Casual Mall Licensing Code of Practice (the Code) for the next three years," said FCA Executive Chairman, Bruce Billson.

This voluntary Code regulates the terms on which participating shopping centres will grant casual licences to temporary retailers such as 'pop-up' shops.

During 2017, the FCA engaged in the ACCC's consultation process on the re-authorisation of the code. Together with the Australian Retailers Association (ARA) and the Pharmacy Guild of Australia, the FCA, in a joint submission, was not prepared to support the re-authorisation of the Code (without amendment) in its previous form and contended that improvements were required to make it effective. The FCA, ARA and Pharmacy Guild argued that the Code in its previous form was not administered or governed well and that dispute resolution processes were largely ineffective.

"The FCA welcomes amendments to the Code's dispute resolution process and the ACCC's recommendations for greater retailer representation on the Code Administration Committee (CAC), the appointment of an independent chair and the need to raise awareness of the Code amongst retailers. The FCA is also pleased that Shopping Centre Council has been receptive to the ACCC's guidance and we look forward to working collaboratively with the Shopping Centre Council, the ARA and Pharmacy Guild to bring the new Code into early and effective operation," Mr Billson said.

"Retail tenancies issues and shopping centre conduct are the source of significant franchise community concerns and have a material impact on franchise business viability and success.

"This Code, properly implemented and administered, has the potential to address a significant 'pain point' for franchise businesses that see a 'pop up' shop appear outside their doors, without all of the costs and obligations of a longer-term franchise tenant, to replicate a franchise business offer at lucrative times of the year. 

"Longer term tenants will now be informed about the Centre's casual mall licensing policy and where 'pop up shops' might be approved before signing a lease; will have their shopfront sight-lines respected; will not face the unreasonable introduction of a new external competitor as a 'pop up' licensee; and can expect a proportionate reduction in Centre-wide outgoings when casual mall licences are granted.  Dispute resolution processes have also been improved.

"The franchise business tenants can expect greater certainty and transparency from Shopping Centre lessors in relation to casual mall licensing that voluntarily sign up to the revised Code, and this is a positive step in the often fraught area of retail tenancy costs and conduct.

"As part of the CAC, the FCA will work to ensure a fair and balanced approach to casual mall leasing for retail tenants, a substantial number of which are franchised outlets.

"The FCA looks forward to engaging productively with the Shopping Centre Council of Australia, through the CAC, to support the early and effective application of the revised Code and to address any ongoing concerns of retail tenants under the Code prior to any application for the re-authorisation of the code in three years' time," Mr Billson said.

According to the Griffith University's 'Franchising Australia 2016' report, there are an estimated 1120 franchise brands operating in Australia, and an estimated 79 000 units operating as locally- owned small business format franchises.  The majority of franchise brands are retailers with the largest segment being non-food retailing, which accounts for 26 percent of brands and 25 percent of franchise units. A further 19 percent of brands are involved in accommodation and food retailing (including food retail, fast food, coffee shops etc) and representing 13 percent of franchise units.

Author: Franchise Council of Australia

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