Franchising Council to unveil retail tenancy code of conduct next month, but Shopping Centre Council says no

The Franchise Council of Australia plans to unveil its Retail Tenancy Code of Conduct next month despite the Shopping Centre Council saying it will not sign the voluntary code for landlords and tenants.

The Franchise Council says it is finalising the wording of the code after consulting with “specific major retailers” and the response so far has been “very positive.”

The FCA, which represents both franchisors and franchisees, says it wants to proceed in a “thoughtful and orderly manner” and will announce the code at its conference in October.

“In this tough retail environment, it’s surprising that we’re continuing to hear stories of franchises being put into situations where we think are unreasonable,” the FCA says.

The code, first flagged in SmartCompany in late July, is intended to address:

• Excessive rent increases.
• Unreasonable shop fit-out requirements.
• Unreasonable behaviour in relation to end of term arrangements for sitting tenants.
• Abuse of market power where landlords offer contracts on a “take it or leave it” basis.

But the idea has been rejected by the Shopping Centre Council, which represents shopping centre owners and managers.

The SCC argues that a voluntary code of conduct is only fair if it replaces existing legislation, rather than adds to it.

“There have been no discussions and we won’t be having any,” the SCC executive director Milton Cockburn says.

The SCC adds that agreements between landlords and tenants are already strictly monitored, being subject to state or territory legislation and certain provisions of the federal Competition and Consumer Act.

Under the plans, a code administrative committee would be established to monitor the code. The committee would consist of one appointee from the FCA, one appointee from the Shopping Centre Council and two elected representatives of the signatories.